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Here are six strategies to help safeguard clients ’ business assets when marriages come apart .

By Gus Dimopoulos

As a divorce attorney for high-net-worth individuals , I ’ ve witnessed firsthand how divorce proceedings can devastate a couple ’ s business ventures . In one of my former cases , a couple who owned a successful nutritional food company chose to unnecessarily prolong their divorce proceedings . That not only made the process painful for both sides , but their business lost key employees , their sales plunged , and they lost out on a generous offer from outsiders to purchase their company for nine figures .

To prevent such scenarios , it ’ s crucial for divorce attorneys and financial planners to work together to safeguard their clients ’ business assets during a divorce . Here are six ways they can do this .

Make sure the divorcing couple is prioritizing business as usual . Running a business during a divorce can be extremely difficult , given the time and emotions involved . Financial advisors and lawyers should work together to make sure the operations of their divorcing clients ’ business are disrupted as little as possible . This means taking steps to minimize painful and costly legal maneuvers , such as subpoenas ; depositions ; and testimonials that rope in partners , key employees and customers .

Have both spouses sign confidentiality agreements . In almost every divorce that involves a couple in business together , I insist that both sides sign confidentiality agreements to safeguard the proprietary nature of the company documents . Delicate facts and figures come to light during divorces — like a business ’ s assets , liabilities , income and expenses . There ’ s no reason to share those sensitive documents with anyone other than relevant experts . It ’ s ultimately not in either party ’ s favor if sensitive paperwork ends up in the hands of competitors or the press or on social media . Without confidentiality agreements in place , a scorned spouse is more likely to make things public , which can lead to the business taking a significant financial hit .

Be transparent . I make it a rule to share as much information with the opposing side as necessary to stem concerns that important data is being withheld . If financial advisors and lawyers for the business owner are cagey and reluctant to share bank paperwork , profit and loss statements , and other important documents , that will ring alarm bells on the other side . It ’ s better to have an open-door policy and remove the fear that something untoward might be going on .

Understand precedent . There ’ s a common misconception that in a divorce , the non-titled spouse — that is , the spouse who doesn ’ t own the business — will inherit half of it . That ’ s simply not

SEPTEMBER 2024 | FINANCIAL ADVISOR MAGAZINE | 29