Considering Divorce? What Happens to the Business?
There comes a time when divorce becomes more common to your thinking than staying together. For additional thoughts on how to know if divorce is the right option for you, read my blog on the Five Signs That it’s Time to Contact a Divorce Attorney. If you’ve come to terms with the fact that divorce is the right option, there are certain divorce issues unique to personal situations that you may need to consider. Being a business owner is one of these instances.
In determining communal assets, it is important to explore the following questions about the business in order to place an accurate value on the business:
- Was the business established before or after the date of marriage?
- Was the business established before marriage but continued through marriage?
- Was the business improved because of a spouse’s contributions?
- Was the business a gift or inheritance?
- Is the business a sole proprietorship or professional practice?
It is important to have a good lawyer who understands the full process of both divorce and business valuation. Divorce can be hurtful and it might be tempting to cause inconvenience and annoyance to the other party throughout the process. This can be an expensive game to play. Having a strong lawyer who is looking out for your best interest will keep these proceedings to a minimum.
Both parties may want to consider hiring a business valuation firm. It’s beneficial to both parties to consider hiring a neutral third party firm instead of both parties incurring the expense of business valuation and then having lawyers negotiate an agreement.
If no prenuptial agreement is in place that addresses the fate of a business, it is important to understand the full implications a divorce will have on a business. In addition to the distraction that business owners will face. A significant amount of money will be drawn from the business for valuation, legal and settlement fees. If a divorce is contentious, and both parties decide to remain involved in the business, the environment could become stressful also affecting the business’ future.
For more information on how divorce could impact your business, contact your lawyer to discuss your personal situation.