Could My Business Partner’s Divorce Jeopardize Our Company?

 Posted on October 24, 2018 in Complex Divorce

While there are a number of benefits to going into business with other partners, there are also a few drawbacks. For instance, if one partner’s marriage ends, the interests of any other business partners could also be at risk. This is because Texas law requires all divorcing couples to divide their marital property, which includes business assets, equitably. When this happens, the business partner’s ex-spouse could become a shareholder in the business as well, which means that he or she could have a say in how the company operates. Fortunately, there are ways to prevent this type of division, so if you have ownership in a business and are dissolving your marriage, or one of your business partners has filed for divorce, please contact our high asset divorce legal team to learn more about your options.

How to Protect Your Business Interests During Divorce

A business partner’s divorce can have important implications for the ownership interests of other partners and shareholders, so it is important for those who own an interest in a business to take certain steps to prevent disruption. For instance, including a contingency for divorce in a business’ ownership, partnership, or shareholder agreement is one of the best ways to protect a business in the event of divorce. These provisions can require a partner’s ex-spouse to sell a business interest that he or she was awarded in any property division settlements following divorce, back to the company itself. It’s important to note that when drafting this type of provision, the parties should ensure that it contains specific terms and conditions for valuing and purchasing the shares. Failing to take these precautions can have serious repercussions down the road, leading to complicated and expensive litigation, which can put a company at risk.

It’s also a good idea to have the spouses of all partners agree to the divorce contingency in writing before any marital discord actually arises, which can help bolster the enforceability of the contract in the event of divorce. Finally, many business partners are strongly encouraged to enter into a prenuptial agreement before getting married, in which, they can specify that business interests remain separate property, even in the event of divorce. Separate property, unlike marital property, remains in the sole possession of the original owner, unless it becomes commingled with marital assets to a significant degree.

Contact Our Office Today

To learn more about protecting your own business during divorce, please contact one of the experienced Georgetown high asset divorce attorneys at Powers and Kerr, PLLC for assistance. A member of our legal team can be reached by calling 512-610-6199 or by completing one of our brief online contact forms. Please contact us today to learn more about how we can help.

Source:

https://www.forbes.com/sites/jefflanders/2011/04/19/divorce-proof-your-business-even-if-youre-still-single-or-happily-married/#5abfcdd7a381