A successful Texas business owner, like many business owners across the country, can make millions. However, those millions can disappear quickly due to a frivolous lawsuit. Many business owners who are involved in high asset divorces believe that their businesses may be financially victimized by a high asset divorce proceeding. When a high-profile, wealthy couple goes through a divorce, one spouse typically is paid generous alimony or spousal support and a large part of marital property also may be given to the former spouse.
Protecting assets by devising a plan before a divorce happens can be a wise move, because a good plan can protect business owners from expensive litigation and vindictive former spouses. A survey of more than 500 business owners revealed that 80 percent of business owners are concerned about the financial effects of an expensive divorce lawsuit on their businesses. Expensive lawsuits add even more stress to the divorce process and can also ramp up anxiety about the cost of litigation.
The survey also revealed that only 15 percent of business owners have asset protection plans in place. Sixty percent of business owners stated that they were unaware of such plans and that no one had ever explained the benefits of having an asset protection plan. Planning ahead for a possible high asset divorce is important if a spouse wants to protect business assets from a potentially devastating marital asset division.
A few strategies for asset protection are quite rudimentary, while others are more sophisticated. A complex approach involves transforming existing assets into different assets that are more difficult for former spouses to acquire. Some state and federal laws, such as bankruptcy code, also may provide protection for these assets. Hence, having the right asset protection plan in place may ward off the ill financial effects of a high asset divorce case.
Source: Forbes, “Few Business Owners Have Asset Protection Plans, But They Probably Should,” Russ Alan Prince, March 17, 2015