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Don’t let your business fail when your marriage does

On Behalf of | Nov 7, 2019 | Uncategorized |

The last thing that you need while trying to extricate yourself from a failed marriage is for your business to go belly-up at the same time. Yet, that is a surprisingly common scenario for those couples who operate family businesses.

Why does divorce so often lead to business woes? While there can be various factors at play here, one key appears to be the lack of an airtight shareholder agreement that dictates how the company will manage when a business partnership goes south. Below are some tips to keep your business afloat in the wake of a divorce.

Keep the business interests primary

Maintaining a bias in favor of the company can keep it solvent during the uncertain times during and immediately following a couple’s divorce. It may seem counterintuitive to maintain the interests of your shared company ahead of the individual shareholders’ often wildly disparate interests. But when your business is sustaining your family, it’s the last thing that either of you should want to see fail during a divorce.

Is your business community property?

With California being one of the few states to follow a community property regime, it can be challenging to have your business stipulated as separate property. To qualify as such, the business must have been owned and operated seperately prior to the marriage. Even then, if the proceeds from the business have mixed with the marital coffers or your spouse contributed significantly to its growth, at least part of your business might be construed as community property and subject to division as such.

Properly valuate your business

In order to fairly determine the fate of your jointly owned company, it must be fairly and impartially valuated. To save money, the divorcing couple can pool funds to hire an independent evaluator. Otherwise, both may hire their own and average the two figures to come up with a number.

Can you coexist as business partners post-divorce?

This solution is certainly not for everyone, but surprisingly, there are divorced couples who manage to continue to jointly run their business even after a divorce.

Regardless of where the two of you fall on the post-divorce civility scale, this takes a level of commitment and good will that few can summon. Your Pleasanton family law attorney can offer guidance and advice when determining the fate of your business in the divorce.


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John T. Chamberlin, Attorney at Law
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