From California to New York and all states in between, there are married couples who jointly own a business. Along with this, there are situations in which one partner believes he or she is the sole owner of the company, however, one comes to find out differently, often during the divorce process.
Although it may not be something you want to discuss, if you and your spouse want to avoid a potential disaster in the future, you should decide what would happen to the business in the event of a divorce. There are many steps to take as you get started, including discussing with your partner how much of the company each person owns.
For some, buying insurance that can cover the cost of buying out another’s share is a good idea. This will cost money, but it will also give you peace of mind.
Another detail to focus on is a separation trigger point. This includes terms that will define separation, ensuring that both parties know when the value of the company will be determined. With this in place, neither party has the ability to drag out the divorce process, which could destroy or devalue the company.
The divorce process can be extremely complicated, regardless of how long you have been married or how many assets you share. If you add a business to the mix, the challenges are going to grow. Fortunately, there are ways to prepare for this during the marriage, allowing both partners to better understand how much of the business they own and what would happen in the event of a divorce.
Source: Entrepreneur, “‘I’m Getting Divorced, and My Spouse Owns Part of My Company’” Mike Sowinski, Apr. 27, 2014