Due to the sluggish economic recovery, many small business owners are spending more time at the helm of their businesses, hoping to lessen unnecessary costs through leadership and presence. With this in mind, the time they spend at the business is taken away from their time at home, which could make them unaware of marital problems.
With a high-asset divorce, especially one that involves a spouse in charge of a small business, there is much at risk. A seemingly simple divorce can become quite complex when business assets are at stake. As many owners have found, divorce proceedings can consume a large deal of time. This means that time is taken away from the business and money is being lost. One small business owner estimated that his business lost $200,000 in the time it spent him to come to a divorce settlement. According to him, this equaled a fourth of the revenues gained from his business that year.
Many business experts bemoan the effects of divorce, but there seems to be relief on the horizon now as no-fault divorce is now an option in every state. A no-fault divorce can often avoid a drawn-out, public legal battle over a divorce settlement. One business owner from Ohio found that, by filing for a no-fault divorce with his wife, the two managed to come to a agreeable settlement. By doing this, the 41-year-old man, who divorced earlier this year, retained complete ownership of his business. In order to do so, he agreed to pay a larger amount for child support.
Even though it may be too late for many already married business owners, financial experts say that it is smart to create a plan to protect a small business before a marriage is finalized, in case of divorce. This usually comes in the form of a prenuptial agreement and is not hard to accomplish.
Source: Reuters, “Divorce has ‘immense’ impact on small businesses,” Deborah L. Cohen, Sept. 28, 2011