Building a business from scratch typically requires financial investment, substantial hard work and sacrifice on the part of the person beginning a company. Whether you have started a local construction firm or run your own successful medical practice, your business is a product of your hard work and a testament to your desire to be independent and capable of providing for your family.

While your business may have allowed you to maintain a good standard of living for your spouse and your children throughout the marriage, you may not feel eager about splitting the ownership of that business with your spouse in the event of a divorce. Depending on the unique considerations of your family and your business, there are multiple strategies that can help you protect your business during a Minnesota divorce.

When did you start the business, and what assets did you use to fund it?

Some people know right out of high school that their dream is to start a successful drywall business. By the time you meet someone you would want to marry, you may have already built up the business into something that sustains itself and generates enough profit for you to pay yourself a salary.

In a situation where you developed a business before marriage and used your separate property to create the business and purchase materials and assets for it, your spouse will have less of a claim to any ownership interest in the business. However, the delineation between separate property and marital property often becomes muddled during a marriage.

If your ex provided childcare or other unpaid services that allowed you to continue to focus on the business or if they made financial investments in the company, they may have a claim to partial ownership. Additionally, if you reinvest any income earned during your marriage in the business, that could also leave ownership vulnerable to a challenge by your ex. 

Have you formally established the business as separate property?

If you executed a prenuptial or postnuptial agreement addressing the ownership of the property, that document could protect your business in the event of a divorce. You may also have a formal or informal agreement with your spouse to exclude the business from the divorce, although proving an informal agreement on such a topic is often quite difficult, especially if your spouse changes their mind and later wants a piece of the company when you divorce.

Making direct arrangements gives you more control than going to court

When there are significant, valuable assets on the line, such as the ownership of your business, you likely don’t want to turn your future over to a judge. When you file for a contested divorce in Minnesota, that is essentially what happens. The judge becomes the one who has the final say in all of the major terms for your divorce.

Direct negotiations or even mediation prior to filing your divorce can allow you to reach an agreement with your spouse wherein they receive adequate assets to offset your ownership interest in the business. Setting those terms in an agreement prior to filing divorce can mean that you have ultimate control over the outcome for you to ensure that your business will remain protected and stable.

Just keep in mind that you will likely need to incentivize your spouse with other assets or favorable terms in other areas if you hope that they will allow you to retain sole ownership of the business.