• 05
  • October
    2011

When Denver couples realize that they may not be able to save their marriages, they shift their focus on protecting their assets and their parental rights during divorce.

For many couples, this means the fair division of debts and assets acquired during marriage as well as negotiating child custody orders that allow parents to spend an equal amount of time with their children. However, individuals who own small businesses in Denver and throughout Colorado may discover that with the end of their marriage, they could also risk the loss of their business.

The founder of a software consulting firm commented that his divorce was "painful" and "costly". Not only did the process take more than a year to settle, but the time spent on working through negotiations and pulling up old paperwork instead of focusing on the business had cost the owner more than $200,000 in the loss of potential work.

Fortunately, a settlement was reached that allowed the owner to retain his business in the divorce, but divorce attorneys commented that this is not always the case. Many attorneys come across clients in the midst of divorce who may lose part of their business in a divorce settlement.

Like the founder of the software consulting firm, many business owners are so focused on what is going on at work that they fail to consider what could happen to their business in the future if their personal life encounters challenges such as a divorce.

There are several options business owners can explore in order to ensure that their businesses remain intact after divorce including: the preparation of a will or premarital agreement, a buy/sell agreement explaining what should happen to the business in the event of certain triggering circumstances, or setting up a domestic asset protection trust.

Small business owners already have a lot at stake when it comes to finances. However, they can relieve some of the stress that comes along with owning a business by taking precautionary measures to ensure that their personal lives don't have a negative effect on the success of their business.

Source: Reuters, "Divorce has "immense" impact on small businesses," Deborah L. Cohen, Sept. 28, 2011