No one walks into marriage thinking about divorce, and it's certainly not something you want to plan for when you're in love. But the reality is that roughly half of all marriages end in divorce. While we often think about the emotional impact, especially on children, the financial fallout can be just as significant, particularly for business owners.
Divorce can bring unexpected financial challenges that go beyond legal fees. You'll need to consider how your assets — including the value of your business — will be divided, how your finances will look once you're no longer pooling resources with your spouse, and whether support payments like child or spousal support will come into play. For business owners, these considerations can quickly become complex.
Once you know the divorce is happening and there’s no way around it, begin tracking your household’s income and expenses. This will help determine your budget after the divorce and assist the courts in determining how any assets or liabilities should be split and whether spousal support or child support will be awarded. Some key areas to track include:
If you have past bank and credit card statements, use them to estimate your typical household spending. Be thorough and include documentation like pay stubs, investment accounts, tax returns, and any debts or assets acquired during the marriage. This will help provide a complete picture when it comes time to divide everything.
In the stress of divorce, it’s tempting to make quick decisions to protect your assets — whether it’s selling property or moving funds around. But big, impulsive moves can backfire. Stay aligned with your long-term goals and avoid actions that could come back to haunt you financially or legally.
Divorce is emotionally draining, and the legal and financial aspects can add to that stress. While your lawyer will handle the legal details, a financial expert can guide you through the monetary side of things. This is especially important when it comes to splitting assets, understanding tax implications and ensuring you don’t make missteps that could affect your financial future.
If you were not involved in planning or managing finances when you were married, it’s even more crucial to speak with someone who can help you navigate this unfamiliar territory. As you move forward, you’ll need to make decisions about budgeting, financial planning, investments and cash flow.
For business owners, the stakes can be even higher. Valuing your business and deciding how to handle it in a divorce can be one of the most challenging parts of the process. Too often, small businesses end up sold, shut down or forced into bankruptcy because of divorce.
If you’re in a position where you need to part with a significant portion of your assets, there are a few ways to approach it:
Your strategy will depend on the structure of your business and your relationship with your former spouse, but it’s crucial to explore all options with a financial expert who can guide you.
During this time, friends and family may offer advice, but they may not fully grasp the financial and legal complexities you're dealing with. It's important to rely on professional advice to make informed decisions.
Divorce is tough enough on its own, and navigating the financial aspects can feel overwhelming. But with the right support, you can protect your business and financial future.
If you have questions or need financial guidance during this time, don't hesitate to get in touch.
Be sure to check out our Financial Planning Tips & Tools for Business Owners webinar, led by Chartered Professional Accountants Matt Peterson, Curtis Gabinet and Dil Sran of True North Accounting. We offer valuable insights to help you plan for financial success.
Looking for more resources? Explore our Strategic Advisory series for small business tips and guidance.