Facing divorce as the owner of a business can be frightening. You likely have short-term goals for your company and long-range plans to see your business into the future.
Often a divorce can lead to changes in your daily life as well as your future plans. As a business owner, the asset division will likely include discussions about dividing assets from your company.
Here’s what you should know about how divorce affects the plans you have for your business.
Some types are better than others
Depending on what type of business entity your company is, you may have more success maintaining your business. Often, limited partnerships (LPs) and limited liability companies (LLCs) have more protection through the partnership or operating agreements that come with those types of entities.
When you (and your family) have the only interest in the business, it is simpler to divide the assets after a sale. Then, if the business is sold, it could affect the succession plans you had for your company’s future.
The impact of succession
Ideally, your business succession plan will include what should happen to the business in the case of a divorce. In this way, a business succession plan can function similar to how a prenuptial agreement works in a divorce.
Unfortunately, if your succession plan does not address divorce, you may have limited options to keep the other aspects of your plan in place. Your options may include:
- Buying out your spouse’s interest
- Continuing co-ownership
- Splitting the business into two companies
When couples cannot agree on asset division for the business, they often need to sell the company and divide the assets. A forced sale of the business can lead to a lower selling price, and the sale also means that neither of you will have the revenue stream from the company.
Our Family Law and Probate attorneys have extensive experience with divorce cases of all levels of complexity. Our firm has provided over one hundred years of legal service to individuals and businesses throughout the Commonwealth of Massachusetts. Our family law and probate clients benefit from the experience our firm has in related practice areas. When a case presents legal issues that overlap, for example, with real estate, employment issues, business and finance, trusts, estates, pensions, bankruptcy or other tax and estate planning matters, our clients receive quality legal advice in all aspects of their matter.