How a Family Business Can Be Affected by Divorce

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It is relatively common for a couple who have married to then start a business together. And whilst often this can prove to be a great success, there are other times when, for one reason or another, the couple decide to get a divorce. It is with this in mind that we examine how a family business can be affected by divorce and how it can be protected.

Plan for All Eventualities

In the first instance, it is important to point out that preventative measures can make a lot of sense. That is to say a prenuptial agreement or an agreement that is made before the business is set up can protect the business in a number of scenarios, including divorce.

The agreement simply needs to detail what will happen if the couple setting it up decide to divorce. It could be that one party will buy out the other or that the business will be sold, leaving both parties in a position to walk away and start afresh.

In any case, all parties will understand what is to happen and thus there is no scope for unpleasant surprises further down the line – there is a legally binding safety net in place.

Talk it Through

In the absence of such an agreement, the next most logical approach is to see if you can broker a solution in private. Talking things through in a quiet and neutral environment may be all it takes to reach an agreement that both parties are happy with and that will allow them to move forward.

If this is not possible, however, don’t despair, there are several more options that you can look to for both resolution and for support.

Legal Mediation

Seeking the help of divorce lawyers is a good way to help get you through difficult times with your family and legal mediation is the first step along that path. Mediation offers a level playing field from which you can discuss the various options that are available to you and will help protect your business.

Having an expert at hand to point out certain advantages or disadvantages of taking particular courses of action can be invaluable. Plus, mediation is quicker, less stressful and less expensive that a more formal legal proceeding.

How the Courts Will See Things

Should the matter be left to the courts to deal with, there are a few things worth bearing in mind. Generally speaking, assets won’t be transferred from a company because of divorce. They can, however, be valued as an asset and that value can be awarded to one party or another if they are to leave the business.

The courts will want to protect the company as an ongoing concern and one that can provide income for both the husband and the wife irrespective of who is running the business. If no other solution is available, the courts may order the business to be sold.

Divorce can be tricky and stressful, particularly if there is also a business to be taken into consideration. The best advice is to seek an amicable agreement that is fair, transparent and that acts in the interests of all concerned.

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Samantha Acuna is a writer based in San Francisco, CA. Her work has been featured in The Huffington Post,, and Yahoo Small Business.