Divorce can carry serious financial consequences that persist long after the emotional issues have been settled. For business owners, this can be especially challenging. When owners of a closely held businesses divorce, they could wind up selling the business or sharing it with a former spouse in an attempt to achieve a property division settlement.
In other cases, one party may need to take on a substantial amount of debt in order to buy out the other party to keep the business under its current management.
As more people launch startups and other companies, they may be concerned about how divorce could affect their businesses. Some investors require companies to show that the owners have prenuptial or postnuptial agreements in place excluding the business itself from being divided or sold in any potential divorce settlement.
In other cases, partnerships may want to put a buy-sell agreement in place. This type of document lays out a clear process and a price for buying out a partner under various circumstances, including when they are affected by a divorce. Of course, not all agreements can be upheld; these agreements must be fair to both spouses to be considered legally valid.
If the business was launched as a joint venture between both spouses, there can be additional complications. In some cases, one spouse may sign the business over to the other, typically in exchange for a larger share of other marital assets like real estate or retirement funds. In other cases, both may sell the business and divide the proceeds.
Business owners have unique concerns when facing the end of a marriage. A family law attorney could work with a divorcing spouse to negotiate a fair settlement on a range of divorce legal matters, including spousal support and property division.