How to Divorce Proof Your Business

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A study commissioned by Massachusetts Mutual Life Insurance Company reveals that 60 percent of business owners do not have a plan in place to divorce-proof their companies.   According to, the study involved six focus groups and 518 business owners.

“If a company is owned by a couple, a divorce can paralyze the business and create divided allegiances among employees and customers,” said Beth Wood, VP of a Mass Mutual division. “It could also jeopardize a family’s wealth and the owners’ retirements,” she said. “Often, a divorce can force the owners to sell the business, with proceeds being divided by the parties involved.”

“When owners aren’t in business with their spouses, a divorce can still hurt the firm greatly, if an ex-spouse is awarded the business in a divorce settlement, throwing ownership and decision-making into doubt, and distracting employees,” Wood said.

MassMutual suggests the following ways to create a divorce-proof plan for your business:

* Buy-sell agreements that can be triggered by certain events, such as a divorce.
* Prenuptial agreements.
* Postnuptial agreements.
* Trusts.