The repercussions of a divorce can be wide-ranging and affect many aspects of a person’s life, but what many people fail to anticipate are the hardships a divorce can levy against a business they own and operate. Many statistics such as this one are difficult to pin down, many business experts suggest that divorces often wreak havoc on company matters, sometimes leading to bankruptcy or other financial problems. To avoid these unintended consequences, we suggest the following preventative measures:
(1) Consult with trusted advisers. Divorce can be difficult and distracting for anyone, and particularly those who are trying to run a business. While operating under these burdens it’s important that you have a trusted team to turn to when making important business-related decisions. They’ll help you stay on the right course as you deal with the divorce process. (2) Plan ahead. One of the best steps to take to protect your business happens well before a marriage dissolves: creating a prenuptial agreement to determine which property or assets are separate and how any marital property will be divided. Drafting an adequate pre-nup is important to ensure it will hold up after a divorce, and both parties should ideally be represented by legal counsel in this process.
Also, you should consider the settlement sources. Although companies are sometimes sold and the assets divided as part of a settlement, business owners will want to consider other options that keep the business intact, including dividing other available martial assets such as cash, stock, real estate and retirement accounts. Other options include establishing a property settlement note, which represents a long-term payout of the value of your business share.
Continuing Business Partnerships After a Divorce
It’s one thing to split up as a couple, but what if you are also business partners? With approximately 3.7 million businesses owned by a husband and wife, divorce among people who jointly run a company is increasingly common. When this happens, partners must decide whether or not they will continue to work alongside one another after the dissolution of their marriage, or how to part ways without damaging the business.
One of the best things a couple that share a business can do is craft a partnership agreement, preferably before they begin working together. In any case, they should determine the conditions under which a partner can sell and how to handle the division of assets. Such agreements should also specify details about how the partners will handle longer-term working arrangements, which sometimes includes a commitment to remain at the company for a given length of time.
The parties involved in a divorce are not the only ones affected; company employees also face questions about the future of the business when their leaders end their marriage. Business partners should be upfront about the impact of the divorce on the organization and try to maintain professionalism throughout the process, even when facing difficult emotions as the result of a break up.
Another critical element in maintaining a business relationship is mutual respect. Keeping this regard intact can be difficult because of the anger and resentment that often accompanies a divorce, but some couples are able to put aside these feelings. Working with a former spouse who still has important skills to contribute to the organization can often override any initial awkwardness.
Business Divorce Lawyer Free Consultation
When you need both business and divorce legal help, please call Ascent Law at (801) 676-5506. We want to help you.
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506