Divorce can be a traumatic event for the emotional health of both parties But it can also be debilitating for a couple’s finances. Both spouses often have to pay thousands of dollars in a process that could take months or years. Illinois business owners and other spouses can take a handful of steps before and during their marriage in order to minimize the chances of a financially ruinous divorce.
Potential threats
Divorce can lead to a wide variety of threats to a person’s assets, especially when divorces and LLCs are combined. These threats are magnified if they own a business, even if their spouse is not directly involved in the business. A divorce court may force one partner to sell either part or all of their stake in a business. This sale could lead to adverse taxes owed and the sale of a struggling business at a loss. In addition, divorce can lead to thousands of dollars in fees paid to attorneys, financial counselors, and forensic accountants. The process often leads to battles between experts in order to figure out how much each spouse is entitled to.
What to do
Legal contracts can be incredibly helpful in protecting assets before a divorce. The most common and familiar type of agreement pertaining to divorces is a prenuptial or postnuptial agreement. These documents lay out exactly who is entitled to what in the event of a divorce. This agreement is often the final word in a divorce proceeding if it exists and is legitimate.
Even if couples do not have nuptial agreements, they can have terms pertaining to divorce in contracts drawn up for businesses that they may own jointly. Such agreements, while weaker than prenuptial or postnuptial agreements, can be helpful in minimizing losses and confusion associated with a divorce. No matter the specifics, couples need some sort of agreement when handling their assets in order to reduce the chances of a divorce dominating their financial lives.
