September 14th, 2017
It’s definitely not something you think about when you are dating, but the truth is half of the people who get married will at some point get divorced. It’s already a painful process, so if you are business owner consider using a prenuptial agreement to address what happens to your business in case of a divorce.
Make Owning a Business Less Complex In A Divorce
Every state in the U.S. has either laws or case law that provide for the right to enter a binding before-marriage agreement. Generally speaking, before-marriage agreements can (based on a written agreement)ly define the terms of a divorce should the parties ever split. For someone who owned a business before their marriage a before-marriage agreement can possibly be a lifesaver, as it can limit and even avoid arguments over many possibly sticky issues. Obviously, laws in every legal control/area of legal control change/differ, so if you find yourself in this position before marriage you should talk to a good family law lawyer about the possibility of a before-marriage agreement. Or, even better, sit down with a (person who tries to settle an argument) who is also trained in family law and together (work or talk with others to reach agreement/get through successfully) the terms and conditions under which you will part ways in the unhappy event of divorce.
The Value of the Business at the time of a Divorce
Even in businesses where both husband and wife are involved it is often obvious which personis more necessary to the future of the business and should continue to run it. It is rare that a couple fights over control of a business. However what people often argue about is the value of the business at the time of the divorce. Usually, the person who will keep the business claims it is worth next to nothing while the non-owning partner says that the business is the next Facebook or Microsoft and is worth a huge figure. The truth is usually somewhere in between.
Can the Ex Co-Own the Business?
Once in awhile the parties in a divorce case will want both husband or wife to remain owners of the business after divorce. While this is technically possible, it is usually a very bad idea. Even if the parties are divorcing “as friends,” continuing to work side-by-side into the future is likely to get very awkward when one or both parties begin new relationships. In this situation we recommend figuring out a fair value for the business and structuring a reasonable buyout of the partner who is not an owner.
If that is just not what the parties wish to do at breaking up, they should by all means come up with a decision making rules of conduct to avoid (people are unable to come to agreement) when it comes to business decisions and management.
While divorce for business owners is certainly more complicated than most divorces it is possible to resolve the issues fairly to both parties and without the need for extended and hateful lawsuits. The complex difficulty of the issues creates a situation that is ideal for (agreement that ends an argument) by mediation. You can avoid a long fight in court using mediation.
If you have any questions about how your business should be treated in a divorce, do not hesitate to schedule a free consultation with one of our experienced San Diego family law attorneys. Call us today at 619-232-9260.