Running a business takes years of hard work. But when divorce enters the picture, all of that effort can feel like it’s on shaky ground. Many business owners worry about what might happen to their company if their marriage ends, especially if they didn’t sign a prenuptial agreement. The truth is, while a prenup can help, it’s not the only way to protect your interests. From postnuptial agreements to buy-sell provisions, there are several ways to safeguard your business during divorce. Here’s how we help clients take action before minor issues become major disruptions.
Postnuptial Agreements: A Second Chance at Planning
A postnuptial agreement is similar to a prenup, except it’s signed after the marriage has begun. It’s a legally binding contract that allows couples to agree on how assets, including a business, should be treated if the marriage ends.
For business owners, a postnup can define what portion, if any, of the company is subject to division. It can also set expectations around spousal support and income derived from the business. This kind of agreement can be especially helpful if your business started or grew significantly during the marriage.
Postnuptial agreements must be written clearly, signed voluntarily, and based on full financial disclosure from both spouses. We help clients draft and review these agreements to ensure they reflect both fairness and enforceability under Pennsylvania law.
Business Valuation in Divorce: Understanding What the Company Is Worth
Determining the value of a business is one of the more complex parts of divorce involving a business owner. The company may be considered marital property, separate property, or a mix of both, depending on how it was formed, funded, and operated.
There are several ways to assess a business’s value:
- Income-based valuation looks at the company’s past and projected earnings.
- Market-based valuation compares your business to similar ones that have sold recently.
- Asset-based valuation focuses on the value of tangible and intangible business assets.
Each method can produce different numbers, and choosing the right one can have a significant impact. We work with financial professionals to help ensure the valuation method used in your case fairly reflects the true worth of the company.
Separate vs. Marital Property: Keeping the Business Separate
In Pennsylvania, assets are divided into marital and separate property. Generally, property owned before the marriage is separate, while anything acquired during the marriage is marital. However, this line can blur quickly when it comes to a business.
You may unintentionally convert your separate property into marital property by:
- Using marital funds to grow the business
- Adding your spouse to company records or payroll
- Mixing business and personal finances
To maintain a clear separation, it’s important to document ownership, avoid commingling funds, and keep thorough business records. The more clearly your records show that the business remained independent from the marriage, the better your chances of shielding it during divorce. We assist clients in reviewing and updating these records to minimize potential future complications.
Buy-Sell Agreements: Internal Protection Built Into the Business
If your business has partners or shareholders, a buy-sell agreement can provide internal protection against divorce-related disruptions. These agreements often include “divorce clauses” that are triggered if an owner goes through a divorce.
The divorce clause allows the business or other owners to buy out the divorcing party’s interest before it’s transferred to a non-owner spouse. This helps preserve the company’s structure, ownership balance, and decision-making power.
If your business doesn’t already have a buy-sell agreement or if the existing one is outdated, it may be time to revisit it. We can help you draft or revise these agreements to align with your business goals and reduce risk in family matters.
Reorganizing the Business to Minimize Disruption
Sometimes, divorce calls for a thoughtful reorganization. A business owner may need to restructure the company to protect its value and operations while legal proceedings unfold.
Some practical strategies include:
- Shifting shares into a trust to keep ownership stable
- Creating different classes of stock (such as voting and non-voting shares)
- Adjusting your salary or profit distributions temporarily
These steps can help you stay in control and reduce the risk of financial strain or operational setbacks. We work with business owners and their advisors to craft solutions that make sense both during and after divorce.
Contact Our Experienced Pittsburgh Divorce Attorneys
Divorce is never easy, especially when a business is involved. But with the right strategies, you can protect what you’ve built and minimize disruption. Even without a prenuptial agreement, you still have tools at your disposal—postnups, valuations, ownership documents, internal agreements, and restructuring options.
At Jones, Gregg, Creehan & Gerace, we help business owners in Pennsylvania take proactive steps to protect their companies during divorce. If you’re concerned about how your business might be affected, contact us today. We can help you find a way forward.