In Maryland, marital assets must be divided equitably in a divorce settlement. This means that you may lose some or all of your business in a settlement if you don’t protect your company. Fortunately, there are several easy steps that you can take to do so.
Put your business in a trust
Assets that are held in a trust are typically considered outside the marital estate. They are exempt from state property division rules, which means that you get to keep the company after your divorce. Of course, the trust can be invalidated if there is reason to believe that it was created in bad faith. For instance, if you created it days before the divorce process began, it’s unlikely that your action would be allowed to stand.
Create a buy-sell agreement
A buy-sell agreement says that you can sell equity in your company to another person for a specified amount. It may also stipulate that certain people aren’t allowed to have any equity in the business, which may give you leverage during settlement talks. Of course, if you do sell equity in the business, your spouse may be entitled to a portion of the proceeds from that sale. However, you may be allowed to buy back into the firm after your divorce has been finalized.
A divorce can put a tremendous strain on both your personal and professional life. However, taking a proactive approach to your divorce may help to ease the burden and minimize the damage that one side of your life has on the other. It may also minimize the damage done to employees, vendors and others associated with your company.
