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How can entrepreneurs protect their businesses during a divorce?

On Behalf of | Jun 21, 2023 | Divorce |

Entrepreneurs can find themselves in a particularly vulnerable position during a divorce. Depending on the agreements involved, the businesses that they worked so hard to build could be in jeopardy as they work towards a division of property. However, a bit of foresight and clear agreements in advance can help Michigan business owners and entrepreneurs protect their interests. Here are some best practices: 

  • Draft a postnuptial agreement. Most entrepreneurs are familiar with prenuptial agreements, and they are quite common among those who own businesses. However, many fail to factor in the changes to their circumstances that would not be covered by the prenup, such as new businesses that have been started or life experiences that would render the original agreement unfair in the eyes of the law. Updating agreements with a postnuptial agreement is often a wise decision for this reason.  
  • Have clear boundaries if a spouse works in or on the business. Many people share businesses with their spouses, or at a minimum have their partner working inside a family business. This can get messy quickly in the case of a divorce. Having clear parameters, including employment agreements and/or business partnership agreements, is critical to keep these situations professional and protect a business in case of divorce. 
  • Redefine work-life balance. Property division is not the only risk a business runs in a divorce. Stress and divided attention of the business owner can also take a toll. Taking steps to care for one’s mental health and to maintain motivation at work can be key in these situations. 

All these pieces of advice have one thing at the core: clear boundaries. Whether it’s setting personal email and calls aside during the workday to focus on a business or keeping a spouse in a clearly defined role within the business, these boundaries and explicit arrangements can be the difference between loss and success in a divorce. Entrepreneurs looking to protect their businesses from a family law situation should speak with a Michigan family lawyer about their particular situation and concerns. 


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