When couples decide to get married, they often become more than just domestic partners – they also become business partners. When business partners get divorced, their business gets torn apart too. Spouses who spent years forming a successful business suddenly find themselves having to divide it up, which can become contentious. Since a divorce is always in the background of these negotiations, old resentments about how the business has been managed or supervised can come to the surface, making things even more ugly. Without the correct attorney, both spouses can become emotionally drained and the business can end up neglected or even dissolved completely.
The worst-case scenario is that you have to liquidate the business and split up the proceeds between you and your spouse evenly. Couples who choose this option usually have a horrible relationship with their future-ex-spouse and therefore, may not feel compelled to come up with a compromise. However, for many couples, there are other options available.
While it is usually impossible to take bad feelings entirely out of a divorce, there are strategies couples can use to make sure their business can survive their split.
Start Off as Strangers
One of the most important things a couple can do takes place at the creation of the company. If you are planning on starting a business with your spouse, it is helpful to treat it like you are starting a business with a stranger. Beginning as “strangers” means defining every aspect of the business beforehand. This can be extremely hard, not only because most people do not want to think about their business or relationship dissolving, but also because most couples run a business together informally. They tend to negotiate who does what with the business in the same way they figure out who does the laundry or takes out the trash within their home.
Clear Definition of Roles
A clear definition of roles within the business helps to avoid conflict. If a divorce does happen, the clearly divided lines make it much easier for one spouse to step aside since a manager or employee can easily fill their role because there is already a job description in place.
Plan for the Future
Figuring how to divide up a company after a divorce is an extremely difficult topic to talk about. However, experts agree couples should create a plan in order to avoid conflict later. Even if couples think they will be able to work together after they split up, there is no guarantee that they will be able to pull it off when it actually happens. When planning for dissolution, it is best for one spouse to plan to buy the other spouse out. Many family law experts recommend having a buy-sell agreement, which says that in case of divorce, one spouse will buy the other spouse’s shares at an agreed price or at a price set after a valuation has been done.
A divorce is never easy, but when you add a business into the mix, things can get even messier. The attorneys at Smith Strong can help you through this difficult process. Call (804) 325-1245 or (757) 941-4298 for assistance.