Dealing with divorce is challenging, and it can become even more complicated when a family business is involved. If you own a business, it is important to hire a divorce attorney who has experience handling similar cases. Understanding how a divorce can impact your business and thinking about ways to reach a fair agreement can help make the process less stressful.
Divorce Can Be a Disruption
Going through a divorce takes up a lot of your time and energy. You may have to duck out of work to meet with your family law attorney or for court appearances. In addition, you will likely be required to provide financial documentation about your company, which can also be a time-consuming distraction.
Getting an accurate business valuation is critical, but it is a complex process. A business appraiser may have to rely on some of your employees to collect documentation such as inventories, expenses, tax returns, and P&L statements. If your spouse is part of day-to-day operations and you are not on good terms, any tension or arguments can make other family members and employees feel uncomfortable.
It Can Impact Your Partners
Depending on the way your business is set up, buying out a spouse can be tricky. For example, if you decide to pay your spouse with shares of stock, how will it affect your partners if you have a smaller share in the company? What are the conditions if your spouse decides to sell the stock?
It is critical to discuss how these issues could impact your partners and the company’s stock value. If you decide to buy out your spouse, the best divorce lawyers in PA should work with you and your business attorneys to determine the best way to go about it.
Even though nobody plans on getting divorced when they are first married, this is also something you may want to address in a business succession plan to make things easier if you do split with your spouse down the road. The last thing you want is a divorce to be the demise of a business you have worked hard to build.
Options for Dealing with a Business in a Divorce
Buying out your spouse’s share. This is a common option that many couples choose. Buying out a spouse can be fairly straightforward or extremely complex, as mentioned above. If a spouse who is doing the buyout may not have enough cash or liquid assets, you may want to talk to your divorce attorney and business lawyers about setting up a settlement agreement that includes a note to be paid off over time.
Selling the business. Sometimes, selling the business and dividing the proceeds may be the best solution for everyone. However, selling a business can take a significant amount of time, which may make the divorce process longer. It is also important to consider the tax implications of selling your business. Working toward a common goal of selling the business is usually most effective when spouses are civil to each other during the process.
Staying in business with your spouse. Even if you are on the best of terms with your ex-spouse, continuing to own a business together can be challenging. Divorce is often about making a fresh start, and if you are in business together, it may be harder to move on emotionally.
Regardless of how you decide to deal with your business when splitting with your spouse, our divorce attorneys in West Chester provide the guidance and support you need to get through tough times.