People don't start businesses hoping they fail; they don't marry hoping to divorce. However, both are events that can happen when people take the plunge into marriage or business ownership.
As such, it is crucial to take these possibilities into consideration and make a plan to recover if they should happen. One especially important decision is to complete some comprehensive succession planning.
What does this mean?
Business succession planning involves determining what will happen to business operations and ownership if an owner passes away, retires or divorces.
Consider the recent announcement that Amazon CEO Jeff Bezos and his wife of 25 years are divorcing. Reports suggest that the couple did not have a prenup, as Amazon didn't even exist when they got married. As such, people speculate that Bezos' wife MacKenzie will get half of the marital property, including Amazon. However, whether Bezos took other steps to protect Amazon in the event of divorce is unknown.
What will ultimately happen remains to be seen, of course. Though, this situation is a good reminder that succession planning is crucial when a business is a marital asset.
What can I do?
As this article notes, there are numerous options for what owners can do to shield a business from a divorce. The suggestions include:
- Separating business and marital finances
- Keeping unnecessary spousal participation in the business to a minimum
- Signing a prenuptial or postnuptial agreement to clarify ownership of the business
- Having a buy-sell agreement in place
These and other solutions can make it easier to protect the future of a company, whether your goal is to keep a business in the family, protect the business from being sold or prevent divorced spouses from having to run the business together.
Understandably, this can be a complicated topic. Not only are there business logistics to examine, but there may also be family tensions and marital relationships that make the discussions even more complex. Rather than let this stop you from creating an effective plan, you can work with an attorney who can help to make this process easier and less dramatic.