Family business owners can often become apprehensive about the possibility of a divorce and its impact on their family and business. Seeking guidance and representation from an experienced lawyer is crucial.
A lawyer can help you establish formal corporate protections to shield personal assets and a family’s financial well-being during a divorce.
Prenuptial or Postnuptial Agreements
The end of a marriage can be emotionally and financially devastating for both parties. A prenuptial agreement can protect each spouse’s financial interests during a divorce.
A postnuptial agreement can determine the distribution of assets and debts acquired during marriage in the event of a divorce. This includes dividing family business, spousal support, debt, and medical expenses.
While many think these agreements are only for the wealthy, anyone can benefit from a well-drafted prenup or postnuptial agreement. It can clearly define what property is separate and what will be considered marital property to prevent costly disputes in the future.
A prenuptial or postnuptial agreement must meet specific requirements to be enforceable in court. These include being in writing and signed voluntarily by the couple. Courts will also consider how the parties disclosed their assets and liabilities. The court may find a specific clause or entire agreement unenforceable if these factors are lacking.
If your spouse is a business owner or has an ownership stake in a business, the valuation of that business may be a significant point of contention during a divorce. A professional, experienced lawyer at Sisemore Law Firm will help you determine a fair value and assess your share appropriately.
Valuing a business involves adding up all of the assets and subtracting all the liabilities. Assets include everything from tangible property to intangible assets. Liabilities cost the company money, including employee wages, loan payments, and other debts.
A business valuation can be helpful in several situations, including benchmarking buy-ins and buy-outs for partners or shareholders, resolving disputes, settling lawsuits, and acquiring financing. However, the process is complex and requires detailed analysis.
When selecting a method, your attorney must review financial statements from the past four to five years, interim profits and losses, cash flow analysis, total assets, and forecasts or projections. If the business is a marital asset, your attorney will also need to determine the date of separation and a fair value as of that time.
Business Divorce Planning
There are several things that a business owner can do to protect their business in the event of divorce. Many of these tools work best if implemented before marriage, such as keeping records of all financial transactions and avoiding commingling marital funds with the business.
Creating legal documents that outline how ownership would settle in the event of a divorce, such as a prenuptial agreement or postnuptial agreement, is one way to do this. These documents can specifically talk about the business and its ownership as separate property, and a lawyer can help draft these documents to ensure a court will uphold them.
A lawyer can also assist in ensuring that tax issues are resolved before a partnership becomes dissolved. This will prevent unpaid state or local taxes from being assigned to individual spouses, which could cause liens on personal assets.
Dividing a family business can be complicated. A qualified attorney can guide and advise during this stressful time to help keep a business afloat and ensure the division is fair. It is important to remember that a divorce does not have to destroy a business; it can be used as an opportunity for the owners to work together and create a new, successful business.
Divorce is often a contentious process that can drag on for months or even years unless your spouse is incredibly cooperative and willing to negotiate. An experienced lawyer can help you find creative solutions to settle disagreements and reach a settlement that meets your needs and complies with the law.
A resourceful attorney can protect your rights when dividing assets and debts. They will review your financial picture and consider equitably dividing marital property, such as homes or other real estate, investment accounts, business interests, retirement accounts, personal possessions, and vehicles. They will also examine your debts, such as credit card balances and mortgages, to ensure they are divided fairly.
Many couples struggle to agree on dividing assets, debts, and child custody and support. In these cases, your attorney will advocate for you in court. They can also assist you with mediation or collaborative law to encourage cooperation and promote a resolution outside of the courtroom that is both cost-effective and satisfying for all parties.
Depending on your situation, a good lawyer will know when to use different communication methods, such as phone calls or in-person meetings. They will promptly respond to your inquiries and address any concerns through email or phone within one to two business days.