A small business owner in Oakland County who is facing divorce or separation might be very worried about the future of their organization.
In addition to the financial fallout, if the business has been in the person’s family for a long time, there may be some concerns about keeping the business in the family and out of the hands of someone who may be hostile following a messy divorce.
Divorces involving a small business are often complex. An owner facing the possibility of a split should strongly consider getting the advice and assistance of an experienced family law attorney, particularly if the divorce could be contentious.
Thinking ahead through important divorce questions can lead to a better result
There are several questions an owner should ask themselves if their goal is to protect their business interest and overall financial status:
- If I have one, what does my prenuptial agreement say? Many family-held and other smaller private businesses require their owners to sign prenuptial agreements. If so, the agreement should spell out how the business will be divided. As a word of warning though, the other party may challenge the agreement.
- Does my business qualify as marital property? Generally speaking, a family-held business will be subject to division in a divorce. To some extent, it does not matter if one’s spouse married into a family enterprise and had little involvement in running the business. However, there are some exceptions where a court will not consider a business marital property.
- What is the business worth? Understanding the financial value of the business is critical to predicting how a court would divide it. Usually, this will require the help of a financial expert who regularly estimates the value of privately-held businesses.
- How will we fairly divide this business? Courts have a lot of leeway on how they divide property. The goal is a fair overall result. The business owner will need to think about what is fair from their perspective. For example, they may wish to buy out their former spouse and will need to figure out how to finance that option. In some cases, former spouses who are both involved in a business may choose to continue to work together.