Protecting a business from personal-life risks: marriage, divorce, and succession

Throughout history, the most intense experiences in life have been sincere emotions. They cannot be bought or sold, and they have no market price. They are individual, personal, and deeply private.

When a person builds a business, they calculate hundreds of risks: tax audits, cash-flow gaps, unfair competitors, economic crises, and more. Yet the most damaging blows to substantial wealth are often not caused by the market. They arise from personal life — more precisely, from the absence of proper legal hygiene within the family.

As a professional working at the intersection of family law and the psychology of significant wealth, I often see the same mistake: successful entrepreneurs treat family matters as secondary and emotional issues that can somehow be resolved quickly if necessary.

However, when emotions take over, rational decision-making disappears. As a result, companies worth millions of dollars may be put at risk.

Below are three key risk areas and practical ways to address them proactively.

Risk 1: Marriage without rules

At the beginning of a relationship, emotions naturally prevail. A proposal to enter into a prenuptial agreement is often perceived as a sign of distrust or as “planning for divorce.” In reality, this is largely a psychological trap.

In Ukraine, property acquired during marriage is generally treated as the joint common property of the spouses, subject to certain exceptions, such as property formally gifted to one spouse or inherited by one spouse. If you establish an LLC, increase a company’s charter capital, or purchase shares while married, your spouse may have a claim to half of that asset or to compensation for its value.

Without rules agreed in advance, a divorce can seriously disrupt the company’s operations. For example, a court may impose an attachment on corporate rights or a share in the business.

A prenuptial agreement can provide an effective solution. It should not be viewed as a “divorce plan,” but as a family security business plan. The agreement may clearly establish that business assets, corporate rights, and income from entrepreneurial activity remain the personal property of the person in whose name they are registered. At the same time, the other spouse may receive a separate guaranteed financial-security package, such as real estate, fixed payments, or other assets. This approach can reduce anxiety and protect the interests of both parties.

Risk 2: Divorce as leverage

Divorce is one of the most emotionally difficult life events. During a conflict, a business can become a primary target because it is often the asset that an entrepreneur values most.

If no preventive measures have been put in place, the parties may enter into a prolonged conflict involving litigation, requests for comprehensive financial audits of companies, and the summoning of top managers as witnesses. Business operations can become unstable, partners may lose confidence, and investors may reconsider their involvement.

If there is no prenuptial agreement and divorce is unavoidable, mediation and a property-division agreement can help preserve both the business and the parties’ resources.

This approach moves the dispute from public court proceedings into confidential negotiations. It also allows for structured solutions: instead of transferring a business interest to a former spouse, who may not need the interest itself and may use it only as leverage, the parties may agree on a liquid asset or deferred payments. This can prevent the company’s working capital from being depleted and support business continuity.

Risk 3: Succession without a plan

Major business owners often postpone succession planning because it is psychologically difficult to think about death or incapacity. Yet the sudden loss of an owner without a clear succession structure can create a critical risk for the business.

While heirs wait to formalize their inheritance rights, a company may be left without a legitimate decision-maker. Accounts may be frozen, contracts may be disrupted, and conflicts can arise among relatives, including children from different marriages, parents, and the current spouse.

One solution is to establish a succession-planning framework. It may include corporate restrictions — for example, provisions in the company charter stating that heirs do not automatically become company participants without the consent of the other partners, but instead receive the value of the relevant interest.

A succession contract or a will can also be used. These documents can define how assets will be distributed and provide for professional estate management during the transition period. This helps maintain business continuity and reduces the likelihood of disputes among heirs.

Protecting capital from family-related risks is not about legal distrust of loved ones. It is about maturity and responsibility to one’s business, partners, employees, and ultimately the family whose well-being the business supports.

The best court dispute is the one that never occurs because the rules and potential scenarios were agreed in advance.

Author – Svitlana Krutorohova, attorney at the law firm “WINNER”.