Nobody thinks about getting divorced after getting married and starting a family business together. But if the marriage does end. In any case, you might have to face a complicated legal battle to protect your family business. At the time of divorce, you may not know how to equally divide your business assets and partnership due to all the stress. The chances are that you may end up losing your share if the case is not handled professionally. In this guide, we will share how you can keep divorce out of family business. And successfully navigate through the process.
Keeping Divorce Out of Family Business
It is common for spouses to work together and start a firm. But dealing with a family business in the process of divorce negotiations can make the process far more challenging than it already is. As with any aspect of getting a divorce, there are a few specifics that will need to be taken care of regarding how you want to handle the business. Here are a few choices:
Continue Working Together
Working together with your ex may not be the ideal solution for most people. But if you and your ex-partner are on good terms and have the ability to work together, it could be the best thing. If you are able to build a co-owned professional business, both partners will be able to keep their share in the business. You will, however, have to maintain good terms. As well as, contact with your ex to establish a healthy and good working environment and work relationship.
Buy the Other Half of the Business
During a divorce, a family business is considered and treated like any other asset from financial and legal perspectives. If you are not able to agree to work together after a divorce, then the business will have to be divided between both parties so that each gets a fair and equal share. The first thing you need to do is hire a professional to conduct a valuation of the business. When the appraiser determines the value of your business, either you or your spouse can buy one-half of the business or use other assets as leverage to get a fair share or exchange.
Sell the Business
Selling the family business may seem like the most viable and easiest option when you want to avoid problems during the process of divorce or when you want to keep the family business out of it. In the case of selling the business, the profits earned through the sale will be divided equally between both parties. Although this option can help mitigate problems, it may not be the best approach if the business is running well and has the potential to yield more profits. You could determine the value of the business by hiring a professional appraiser and sell your business at a higher appropriate price.
Put Plans in Place
When a married couple runs a business together and eventually files for divorce. The fate of the business gets in trouble. Typically, the future of operations and ownership of the business will be decided according to the terms and conditions mentioned in the business contract. Or the agreement at the time of establishment. An agreement sets forth all of the responsibilities, rights, and obligations of each party. Hence, it can ensure the continued success of the business even after the divorce. It is always best to mutually decide the fate of the business. Rather than accepting a decision imposed by the judge in case of conflict.
Enter Into a Pre-Nuptial Agreement
If you have a family business and do not want your spouse in the future to have a share in it (in case of a divorce). Then you can enter into a pre-nuptial agreement and mention a clear provision regarding the business. Thus, in the event of a divorce. The husband/wife shall not be entitled to receive any share or assets of the business. You can also add a clause that would stop the court from considering the business value. Or have its assets divided as marital property at the time of divorce. A pre-nuptial agreement allows you and your spouse to mutually decide the division of business and protect it from court’s determination. Establishing an agreement before or at the time of marriage is a great way to prepare for unforeseen and unexpected circumstances. Such as divorce.
Another form of agreement that can help keep divorce out of family business is to sign a spousal waiver. If one partner is running the business while the other partner states that they have no interest in the shares or assets of the business. You can get them to sign a spousal waiver. This will ensure that no conflicts arise over the handling and management of business during divorce.
Hire an Attorney
Spouses often have a difficult time splitting up their assets after getting a divorce. But with the help of a professional and experienced divorce attorney, you can easily navigate through the process. And keep divorce out of your family business. A divorce attorney has the legal knowledge of the laws and rights. Not to mention, they can help out with all of the paperwork without making mistakes. You will be able to get a good deal on everything by hiring an experienced divorce attorney.
When a family business is owned jointly by a married couple, the boundaries are often eliminated or blurred between the affairs of management and ownership of the company. A contractual, well-drafted, and protective provision in an agreement can often keep family businesses operating successfully even after a divorce.
Regardless of what option you choose at the time of divorce. It is always advised to work with a professional lawyer who can guide you through the process. So they can help you get the best deal out of the business.