When a marriage faces dissolution, and one or both spouses own a business, the road to separation is more intricate.
Divorces involving business interests bring forth a unique set of challenges and considerations that demand careful attention.
1. Valuing the business
The first significant hurdle in a divorce involving business ownership is determining the value of the business. This step requires a thorough financial analysis of the company’s assets, liabilities and overall worth. Accurate valuation is necessary to ensure a fair and equitable distribution of assets between the spouses.
2. Working toward equitable distribution
After the valuation, the next step is to divide the marital assets fairly. Courts typically aim for an equitable distribution, which may involve one spouse retaining ownership while the other receives compensation in the form of other assets or a lump sum payment.
3. Protecting business interests
For the spouse who owns the business, protecting their interests is important. This may involve implementing safeguards to ensure that the business remains unaffected by the divorce proceedings. Such measures can include creating a prenuptial agreement or establishing a post-nuptial agreement that outlines the business’s status in the event of divorce.
4. Maintaining operations
Business continuity must continue during a divorce, especially if both spouses are active in its operations. Clear communication and cooperation can help prevent disruptions that can adversely affect the company’s performance.
While approximately 689,308 divorces happen a year, couples who own a business face additional hurdles to preserve their financial stability and the integrity of the business.