Just recently Steve and Elaine Wynn made the front page of the New York Times in an article about the impact their divorce might have on the future of Wynn's casino business. In their case, Elaine was given half of Steve's equity in the company when the couple called it quits and now, years later, is ready to sell it to fund outside ventures. The problem is that, when she does, Steve will lose his half the shares that he had always counted to be on his side, possibly resulting in the loss of the company he founded decades ago.
The kind of situation experienced by the Wynns is precisely what worries business owners across the country. Starting a business is hard enough, and building a successful business is even harder. To then worry about having all that taken away in a divorce is truly upsetting to imagine. So what can you do to protect your business in a divorce?
The best place to start if you want to protect your business is to prepare a prenuptial or post-nuptial agreement. These agreements walk through various assets of the couple and can help clarify which ones are deemed separate property in the event of divorce (and which ones are not), potentially saving your business from being ripped apart down the road.
Business operating agreements
A business operating agreement exists not between you and your spouse, but between you and business partners. These agreements can be written to say that the transfer of one person's share of the business is prohibited without prior approval from the partners or that any shares being sold by a partner must first be offered to the other partners for purchase.
Finally, a good way to minimize risk to your business is to limit your spouse's exposure to the company. If your spouse spent years of long nights staying up helping you get the business started or has invested time working at the company (with or without pay), it makes it dramatically easier for him or her to rightfully assert an interest in the business during a divorce.