Maryland is an equitable distribution state. This means a court decides what is fair for asset division in divorce.
If you own a small business, you stand to lose a large percentage of it in a divorce. Sometimes a divorced couple can run a business together, but this is rare. It is in your best interest to prepare for the worst-case scenario so you do not lose a portion of your business.
Draft a prenuptial agreement
The easiest way to protect your business is to sign a prenuptial agreement before you marry. In this agreement, you can specify that you get to maintain ownership of the entire company in the event of a divorce. Usually, you have to offer something else in exchange, such as your house.
However, a lot of people start businesses after they marry. In this case, you can still create a postnuptial agreement. In Maryland, postnuptial deals follow standard contract law. Sometimes postnuptial arrangements are not looked upon favorably by the court or arbitrator, however.
Do not invest everything back into the business
Pay yourself a salary. Otherwise, you give your spouse the option to claim the business did not benefit your family during the marriage. This opens the possibility of your spouse claiming a larger part of the business in the interest of fairness.
Keep business and family separate
The best way to keep your spouse from taking a percentage of your company is to separate them from business affairs. If they can rightly claim to be a part of the business, they will likely come away from the marriage with a piece of it.
Divorce can be a complicated affair when you own a business. Hire an experienced attorney and take preventative steps to avoid losing your life’s work.