Divorcing Your Business Partner in a Family Business

When the family business is between two spouses, divorcing the business partner is often also divorcing the spouse simultaneously that can lead to double the complications and severe implications for the future of the company. When divorcing the business partner and husband or wife, the individual will need to know how to proceed forward.

The Divorce with the Business
When both partners are in a family business, divorce can either strain business interactions and continued growth or kill it entirely. In some rare circumstances, both partners are able to continue on working together. However, many spouses will choose to end the business entirely or sell to the other person for a reasonable price. The divorce may also lead to the conclusion of a company if the two spouses cannot agree to a plan that will exclude the business’ split for asset and debt division of property. Depending on the relationship, it is sometimes possible to save the company and protect the employees even in a family business.

The Future of the Business
A family business is usually marital property, and if it is not at first, it may become marital or community property if the spouse becomes a partner. The company may end if the two partners and spouses cannot agree to certain provisions that divide assets and debts by either excluding the business or protecting it in some manner. The judge or other authority may require the spouses to sell the business to provide assets to one or both parties if no alternative exists. In the likelihood that the company can continue on, the spouses may work together or one may sell to the other.
The Possible Ownership
In many family businesses, there are two ways that the partnership may exist. Most of the time, one spouse will own the business with the non-owner involved with ideas or advice on how to proceed through certain events or problems. The other spouse has no actual stake in the company and no right to take the business during the divorce process. In the other situation, both spouses own the company. This could lead to the divorcing spouse taking half of the business through a required sell which is a possible judgment the court authority will make for the divorce case.
The Complication with Ownership
One of the problems with a family business is that both spouses may treat it like they both own it. Even if only one has a legal right to ownership, this involvement could lead to complications during the divorce process. Even if both own the company, there are other processes that they may skip such as the shareholders’ agreement provisions. Legal fees, a business lawyer and specific documents may not exist when the couple feels that there is no possibility of divorce. This may complicate the ownership matters later when there are no papers to prove that only one person has a true involvement in the running of the company.
The Divorce and the Family Business
When the business partners are no more because of an end with the relationship, the business may suffer immediately or after the process starts to complete the divorce. This may also affect who gets what and if the company will need to sell assets or the entire business. Depending on the state, it is possible that the business interactions may cease during the divorce process unless there are certain legal documents that provide a way to bypass this effect on the company. The spouses can leave the interactions running with other family members or employees if necessary.

If the divorce requires the selling of the business, the spouses may need to agree to what occurs first and who tells the others that the conclusion of the company is at hand. If the divorcing business partners are unable to peacefully accomplish these goals, a lawyer may advise each on what is necessary to resolve the current issues. With the divorce proceeding, the business may require special handling to ensure more assets are available for the sale or when transferring the interest solely to one business partner if he or she will take over.
The Business Lawyer in the Family Business Divorce
When the divorce is inevitable, the partners in the business or owner may need a business lawyer to explain how to proceed carefully and protect the company from the divorce process. If the matter requires a sale, the legal professional can support this action as well.