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What Happens to the Family Business During and After a Tulsa Divorce?

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Owning a business makes you particularly adept at ascertaining risks, competition, technology, and potential supply demands. However, have you ever considered a divorce as a major risk to a business? family business divorce

Couples that start a family business are typically young when it begins while the value of the business is low. While 50 percent of marriages in the United States do not last, couples should be cautious when choosing to start a family business without proper procedures in place.

Often the couple will have most of their net worth invested in the family business because it is their biggest asset. This means a spouse will have to buy out the other during a divorce. Protecting your business through a divorce is essential for the business to continue operating profitably.

Temporary Orders

Before any decision is made concerning the family business, a spouse can bring a temporary order so that the business can continue to function and operate. This is to ensure one spouse does not operate the business in such a way as to devalue the asset in order to present a low buy-out amount to the other spouse.

Premarital and Post-nuptial Agreements

If you and your spouse had a family law attorney create a premarital agreement before your marriage, then the document should speak to how the family business is to divide upon divorce.

If you and your spouse cannot agree how to divide the business, a family court judge will. This document will protect your business from the court deciding how to divide an asset that is probably near and dear to your heart.

However, many couples do not begin the family business until after marriage, which is where both buy-sell agreements and post-nuptial agreements are used to protect a family business.

A post-nuptial agreement is similar to a premarital agreement. However, the agreement is created and signed after the marriage begins. The document has the same effect as the premarital agreement, the timing is the only difference. The post-nuptial agreement must be entered into voluntarily and both parties must understand their rights as described by their family law attorney.

Buy-Sell Agreement

A buy-sell agreement, also known as a buyout agreement, is a document that outlines the steps a business own must take if their business partner and co-owner dies or is forced to leave the business.

Typically a buy-sell agreement should be constructed requiring two elements.

First, the buy-sell agreement should require the former spouse to sell interest, that is received in a divorce settlement, back to the business’s owners. Second, the sales rate of the interest to be sold back should be set based on an agreed upon valuation method.

Amicable Partners

If parties are amicable, it is in their best interest to work together and decide between the two how the business shall be divided. A family business is not just a profit-making machine, but a melding of two people’s hard work over the years to create a passion.

If a couple leaves it up to court to decide, many years of hard work could be undone. The best and most simple way to ensure the survival of a business is for the couple to continue as co-owners.

The way the business is structured from the beginning is important to ensure operation after a divorce. Ex-spouses may work in different departments, different offices, or use intermediaries for communication.

If you are able to continue to work with your ex-spouse, make sure a shareholder agreement is created that allows a buyout by either spouse at a reasonably agreed price.

If you do end up buying out your spouse, you must have your business appraised. This can be a lengthy process and quite expensive, as is the financing in order to feasibly finance the buyout.

Free Consultation with a Tulsa Family Divorce Lawyer

The family business is often the most important asset in a marriage. Having to divide this asset can be heart-breaking and financially straining. A family divorce attorney can help during the divorce process in order to preserve your family business and ease the process.

Contact an experienced Tulsa divorce attorney when you need to go through the Oklahoma divorce process.

For a free confidential consultation, call now: 918-924-5526.

The post What Happens to the Family Business During and After a Tulsa Divorce? appeared first on Tulsa Divorce Attorney.

 

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