Whether you reside in Ohio or another state, a divorce can sometimes deliver substantial damage to the health of a spouse's separate business enterprise. There are some steps to take that can insulate the business from the most destructive economic effects of a divorce. The strongest tool to protect one's pre-marital assets from later claim by a spouse is to have a prenuptial agreement signed by the spouses.
A prenuptial agreement can put any particular assets out of the reach of the other spouse. As long as full disclosure is made, a spouse cannot successfully challenge a prenuptial contract when a divorce occurs. A post nuptial agreement may also serve the purpose in some cases.
The best thing for the business owning spouse to do is consult with a divorce attorney and a financial expert when trying to decide whether there are any protective remedies open. They may recommend something called a domestic asset protection trust. Such a legal instrument can sometimes be used to put the business in a trust that owns it.
If keeping the business from a potential divorce attack is important, then the business owner must maintain a separation of business and marital affairs. Keep separate marital and business accounts. It is unwise to appoint the spouse as an officer or connect him or her to the business activities. It is also imprudent to pay the owner-spouse a less than market salary. Paying less indicates somehow an attempt to impact one's family life, leaving a claim open to the non-owning spouse.
When there is a mix of assets, negotiations are almost always a part of a divorce in Ohio and other jurisdictions. An owner can trade the house or cars or summer homes for maintaining full ownership of the business. In any event, the issues are complicated enough that it is best to have the guidance of a divorce attorney, and in appropriate cases, a financial advisor, to traverse in strong condition to the end of the process.
Source: tech.com, "10 Rules All Entrepreneurs Must Follow to Divorce-Proof Their Business Financially", Zach Schleien, Dec. 27, 2014