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Protecting your Massachusetts business during divorce

Family law attorneys who are well versed in promoting the interests of clients in high-asset divorce cases know that one or more business interests are commonly of great importance to them and prominently feature during the divorce process.

In fact, business ownership is frequently a common denominator in a marriage with high net worth and, thus, a matter that often commands some serious attention in a marital dissolution.

Here's an obvious and central question regarding a business that comes into play during a divorce: What is the best way for its owner to protect it?

Of course, the answer to that traces fundamentally to whether business creation, continuance and prosperity owes to the success of a single spouse or, rather, to the collective efforts of both spousal partners as a team. If the latter is the case, then a judge will view the enterprise as marital property and divide the asset equitably between the partners.

If, conversely, the business is all about the inspiration and efforts of one spouse alone, that spouse might reasonably want to take requisite efforts to ensure that the enterprise will be deemed as separate property and not subject to division in a divorce.

As we note in a website article discussing strategies for protecting a business during divorce, one way of accomplishing that for a business that already exists at the time of marriage is for marrying parties to execute a prenuptial agreement spelling out "how business interests will be handled in the event of a divorce." A postnuptial contract can be similarly effective pertaining to a business that comes into creation following a marriage.

Establishing a trust can also be a creative and flexible way to address business concerns. Given that the trust itself owns the business, the separate/marital property determination never comes to the fore.

And watch out for commingling. We note in the above article that "it is wise to keep business finances separate from personal or family finances."

Unsurprisingly, there are many additional strategies that make strong sense for any owner wishing to keep his or her business safely designated as separate property and exempt from divorce-related division.

A proven high-asset divorce attorney with significant experience in property division determinations can discuss them and help ensure that the best interests of a divorce client are fully promoted.

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