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Divorce insurance probably not be the best option

In an age where people get insurance for almost any event that could influence their lives, divorce is not exempt from this trend.

According to the Huffington Post, there are a variety of companies that provide divorce insurance to individuals. Several of these businesses even provide a calculator to pinpoint the likelihood that a marriage will end, an “exact” science for any newlywed who is concerned.

If individuals are worried that their marriage is not going to last, a prenuptial agreement that is prepared by a divorce attorney may help to prevent future anguish and ease the process in the unfortunate event that it occurs.

The Wall Street Journal reported that these companies will often provide only $1,250 in coverage for the divorce process, and the payments, which can amount to $16.00 a month, may eliminate any gain in the situation. This insurance is also not feasible due to the fact that a marriage must last four years if someone were to be eligible for the premiums.

“It’s just throwing money into a black hole,” a divorce lawyer told the Journal about the likelihood that this insurance will actually help individuals.

The effect of divorce on small business ownership

Though divorces can be difficult on all involved parties, sometimes the thing that suffers the most is a small business. However, an individual’s company doesn’t have to become entangled in the legal process, according to Reuters.

Glenn Phillips, the founder of software consulting firm Forte Inc., knows all too well the effect that a divorce can have on a business. The innovator estimated that his legal battle cost him more than $200,000 in lost new business and his wife’s attorneys constantly forced him to disrupt business meetings to dig up reams of paperwork, the news source reported.

“The divorce forced me to reexamine my life and how the business was structured,” Phillips told Reuters. “I became more of a delegator.”

Depending on the state in which the divorce occurs, the process can become burdensome for a small business owner. The claims against an individual can hurt their business, and can make the legal battle a painful and public spectacle, according to the news source.

The National Federation of Independent Business reported that an amicable agreement between the two spouses can save a business, and an unbalanced outcome can lead to a dismemberment of the company.

Protecting yourself financially during a divorce

Relationship experts estimate that more than half of all marriages end in divorce. Despite this grim outlook, only between five and 10 percent of people sign prenuptial agreements. According to Ask Men, this discrepancy leaves many men at risk financially.

To prepare for the financial impact of a potential divorce early on in a marriage, the website suggests that couples keep the property they own separate, allowing men to keep what was rightfully theirs before the split. Simple steps to achieve this include keeping a wife’s name off of a bank account or off the deed to a house.

Keeping money separate can also help men prepare for the possibility of a divorce down the road. Ideally, a couple should have a joint checking account as well as separate accounts for the husband and wife. While this system may seem paranoid, it is the best way to keep track of who is paying for what, the website explained.

According to MSN, the spouse who earns less money typically suffers more financially during and after a divorce. If financial strains are imminent, ex-spouses can begin to climb out of the hole by creating their own credit.

A prenuptial agreement can save the family business after divorce

Family-owned businesses are the backbone of the American economy and the communities they call home. However, a divorce in the family can rock the foundation of these businesses, especially in states with no-fault divorces in place, according to Forbes.

In these states, all property, including the family business, is considered marital property and must be divided equally. But even in states without no-fault divorce systems, the family business can pose many issues in a separation because it is often the most valuable and most illiquid asset in the marriage. It is rare for the business to survive in tact or without a substantial loss in value.

According to Forbes contributor Charley Moore, the best way to save the business is to have a prenuptial agreement in place. This legal document will easily clear up how marital property of shared ownership will be dealt with if a break-up occurs.

The National Federation of Independent Business states that in most cases, a business’s equity is split evenly when a prenuptial agreement is not present, but other considerations will be taken account in the division, such as whether the couple started the business together or if one spouse came on later as an owner.

Joseph Cordell’s advice on prenups

The single largest business transaction that most people will go through is their marriage vow, according to Joseph Cordell, principal partner of Cordell & Cordell.

So why do so few people enter into a marriage without a prenuptial agreement?

“They’ve never really gained a lot of momentum in our culture among those financially below the very upper echelon. Usually, first marriages involve young couples who don’t have a lot of assets or children so they feel a prenup is addressing something that is entirely speculative,” Cordell said while appearing on the radio show Dresser After Dark with Michael Ray Dresser. (Listen to the full interview.)

When you get married, you are essentially becoming business partners that encompasses not only all the assets you currently posses (though there are exceptions of course), but also including every single dollar you make going forward, according to Cordell.

“It’s a huge deal, and most people head into marriage without realizing it’s the gravest financial decision they will every make,” Cordell told Dresser.

Cordell appeared on the program to discuss his new book, “The 10 Stupidest Mistakes Men Make When Facing Divorce.” 500,000 men face divorce each year and most will make irreversible mistakes.

“This is an area in which men can least afford to make mistakes because they are in a court system that is set up against them,” Cordell said.

Click the link to listen to the full interview.