Divorce can be a complicated process. However, when the spouses who are calling it quits are in business together, the number of difficult problems and the people impacted by the break-up are multiplied. According to the most recent U.S. Census, some 3.7 million businesses are owned by spouses. Given the divorce rate in this country, that means a lot of spouses will be determining how to move forward with a business as well as their own lives following a break-up.
Many couples hesitate to draw up a prenuptial agreement because they don’t want to anticipate a break-up before they’ve even tied the knot, and those who own a business together may balk at drawing up papers to designate what will happen with the business if they divorce. However, it is critical that they do.
One California attorney who advises people on business agreements as well as prenups says that whenever two business partners decide to get married or a fiance is brought into the ownership of a business, the couple should have a detailed prenup. That prenup should document the business partnership and the ownership percentage of each of the two.
The prenup should also spell out what role each person will have in the business if they are no longer a married couple. This means not just their titles, but their authority and decision-making powers. By determining as specifically as possible what your roles will be in the business post-divorce, you will help the business continue more smoothly. This means less negative impact on your employees, customers, shareholders and reputation.
If the marriage does end in divorce, one of the key elements in dealing with the business is determining its value. This can be an area of serious dispute, especially if the spouses are not equal partners. It’s best to bring in an independent appraiser to determine the value. That appraiser should work with your attorneys to determine the best valuation method to use. The laws in your particular area could impact the way the value is determined.
While emotions can run rampant during a divorce, it’s important not to let your feelings toward your spouse impact business decisions. By having strong Texas legal and business advisors, and a strong emotional support system, you can work toward making the best decisions for your own future as well as that of your family and those who depend on your business.
Source: CNNMoney, “Double trouble: When spouses who share a business call it quits” Brandon Southward, Apr. 09, 2014
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