6 Ways To Minimize the Impact of Divorce on Your Business
Family law attorney Jennifer A. Brandt, writes in Fox Business Small Business Center about how divorce affects not just the relationship of those involved but also the business, if one of the spouses is a business owner. The emotional agitation a party to the divorce undergoes can have a negative impact on the business as well as to how he or she deals with employees and business partners. This could lead to the sale of the business. Brandt lists ways to minimize the effect of divorce on the business. A prenuptial or post-nuptial agreement on asset distribution can protect the business.
Aside from financial concerns, anxiety and emotional turmoil usually associated with divorce can have a major impact on the business. It can affect the person who is the party to the divorce, as well as other business partners and employees.
In connection with the distribution of assets in the divorce, the business will likely be valued. This will require a financial expert who will be scrutinizing the books and records of the company. Questions will be asked about business practices and expenses. Financial documents concerning the business must be produced, and there is a risk that confidential information may be disseminated.
In the worst case scenario, the business may even have to be sold in order to pay the non-owner spouse his or her share of the business.
There are ways, however, to minimize the impact of a divorce on the:
No. 1: First and foremost – get legal counsel. A good divorce attorney will have extensive experience in managing both the personal and business aspects of a divorce, and can provide counsel on how to reduce the impact on the business.
No. 2: A prenuptial agreement or a postnuptial agreement (entered into after marriage) can predetermine the distribution of assets in a divorce, and thus can protect the business.
No. 3: If there are multiple business owners, the business partnership agreement or shareholder agreement can address a methodology of buyout or valuation of interest if a divorce is filed against one of the business owners.
No. 4: If the first two agreements don’t exist, the parties can agree to hire one joint financial expert to value the business which will help streamline the process and keep costs down.
No. 5: The parties, counsel and any experts involved can enter into a confidentiality agreement to protect sensitive information and give assurance that trade secrets will not be disseminated.
No. 6: To avoid the sale of the business, oftentimes a settlement can be structured with payments to a spouse made over time so the business is preserved. …
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