24 Aug Divorce with a Business Involved
Divorce is an unpleasant process for most couples. Divorce with a business involved can be even more complicated and combative. Couples usually do not want to remain business partners once the marriage is over. In these cases, the spouses will need a double divorce: one for their marriage and another for the business.
Working Together to Protect Your Livelihood
Some couples approach divorce like a war, with every intention to defeat the enemy. However, when you own a business with your spouse, it is important to remember you are playing for the same team. If your marital discord runs the family business into the ground, this is a mutually negative situation. It is in the best interests of both spouses to work together to preserve the health of the business.
You can protect your mutual financial interests by keeping quiet about marital issues around your place of business. Maintain your professionalism, and never ask an employee to act as a go-between for you and your spouse. Do focus on keeping the business running smoothly, but don’t make any big or rash decisions.
Premarital and Business Partnership Agreements
Having a solid prenuptial agreement in place is helpful should you need to separate your financial stake in the company. Business owners who happen to be married should also have a detailed business agreement that covers partnership dissolution, buy-out options, etc.
Of course, hindsight is 20/20 on these issues, and many divorcing couples find themselves splitting up the family business without a formal agreement to rely on. If this describes your situation, it is recommended you find a divorce attorney with experience handling combination marriage/business dissolutions.
Options for Co-Owners
There are several ways to split the family business in a divorce. Usually one spouse will “buy out” the other, essentially paying them to step away from the business. This can be a lump-sum payment, or a spouse may negotiate to receive a certain percentage of net profits. The buy-out is the most common scenario when one spouse plays a larger role in the business than the other.
Another option for a divorce with a business involved is liquidation. This describes a situation where all the business assets are sold and any existing company debt is paid. The equity is then split between the spouses (not necessarily 50-50). Liquidation may be the best option for a business that is not sustainable once the owners separate. Unfortunately, both spouses will need to find a new line of work.
Finally, co-ownership is a rare (but possible) solution for business owners going through a divorce. It is typically very difficult for a formerly-married couple to make it work as business partners, but it could be an option for those who do not want to walk away from a thriving business. For the co-owners that are up to the challenge, setting ground rules, expectations, and written agreements in place can help ensure success for this unique partnership.
Get Help Today
If you are considering divorce or have questions about a divorce with a business involved, contact an experienced Mt. Pleasant divorce attorney. Klok Law Firm LLC can help protect your personal and financial rights. Call us today at (843) 216-8860.