The Barry S. Edwards Law Office brings you a guest blogger, Aaron Hall, a business law attorney.
Business Ownership and Control After a Divorce
When a couple gets divorced, they need to think knowledgeably about how the divorce will affect their business and the legal issues that arise with business ownership and control. A business is a marital asset that needs to be divided between the spouses, even if the business is held entirely by one spouse. The business includes not only income, expected income, and assets (and liabilities), but also such things as good will, trademarks, and other less-tangible assets.
If business ownership is split between spouses contemplating divorce that couple should consider the following: How will the business operate after the divorce? The couple may ultimately conclude that they cannot effectively own and operate a business together. For this reason, many divorcing couples decide to value the business and have one spouse purchase the other’s interest in the business. However, unless both spouses participated in the management of the business a spouse may not have the essential skills and relationships with customers, vendors, and employees to effectively operate the business.
Consult a Business Attorney
As determining child custody requires an experienced divorce attorney, determining corporate custody requires an experienced business attorney. There are numerous ways in allocating ownership and control of a business. In the event of a divorce the ultimate goal is to prevent martial disputes from interfering and hijacking business affairs, thus, preserving the value of the business by avoiding disruptions in operations. There are a number of ways this can be done.
Keeping customers, vendors, and employees out of the divorce fight is critical in preserving company morale and confidence in the business doing so helps avoid a loss in the value of the business. Yet, this is not always possible;some divorces are so bitter and angry that a spouse would rather intentionally destroy or sabotage a business, even if it is against his or her own financial interest.
Negotiating the terms of a transfer of the business can be a lengthy and exhausting process; however, it may be the only way to save the business. The selling spouse can agree to a single payment or period payments. It should be noted, if the selling spouse agrees to ongoing payments the payments should not be based upon profits as profits can be manipulated. There are many ways to resolve the issues arising from business ownership and control in a divorce; however, to best preserve the value of the business, a business relationship should end with the martial relationship.
Minnesota attorney Aaron Hall is an experienced lawyer in Minneapolis & St. Paul, representing clients in a number of legal areas, including Corporate & Business, Litigation and Intellectual Property.