Divorce and the Family Business
When a married couple owns a family business and then later decides to divorce, they often face serious obstacles when it comes to property division. In some cases, divorce can strain business interactions to such a degree that growth is completely stunted or at least significantly reduced. While it is possible for divorcing spouses to continue to work together once their divorce is finalized, this state of affairs is relatively rare. Instead, couples usually need to work out who will retain the company during the divorce process itself, which could take the form of one party selling his or her interest to the other, or choosing to terminate the business entirely.
The route that a couple chooses to take in regards to the fate of their family business after divorce, depends largely on their specific circumstances, making it especially important for divorcing couples who own a business together, to contact an experienced property division attorney who can explain their legal options.
The Future of the Company
Family businesses are usually treated as marital property. This is true even if one of the spouses owned the company prior to marriage, if the other spouse later became a partner or helped support the business financially. As a result, the business will need to be divided equitably upon divorce, which can be a complicated undertaking. Dividing a company is not as simple as dividing the contents of a bank account. Instead, the parties will need to decide whether:
- Both partners will continue to run the business together;
- One spouse will sell his or her interest in the business to the other;
- The company will be sold and the proceeds divided equitably between the parties; or
- One party will agree to accept a greater share of another asset in exchange for his or her interest in the business.
For help determining which of these moves is right for you and your family, please contact our property division legal team today.
There are a few steps that couples can take pre-divorce to ensure that no issues regarding the business arise in the event that a marriage is dissolved. For instance, signing a prenuptial agreement, which states that a business is separate property and will remain in the sole ownership of the original owner is one of the best ways to avoid a messy divorce. Alternatively, a couple could enter into a postnuptial agreement, in which a business is defined as separate property, or a couple states how the company will be divided in the event of divorce. Placing the business in a trust can also keep a company from being counted as a marital asset, while creating a buy-sell agreement can play a critical role in defining what will happen to a business if either owner’s status should change. The latter could limit one spouse’s ability to acquire ownership, deprive a spouse of voting rights, or give other partners the right to buy an ex-spouse’s interest at a lower, predetermined rate.
Contact Our Fort Lauderdale Office Today
For help protecting your own family business during divorce, please contact experienced Fort Lauderdale property division attorney Sandra Bonfiglio, P.A. at 954-945-7591 today.