Amicable divorces are rare. Here in Philadelphia, people consider divorce one of the most difficult chapters in their lives as there are a lot of issues that require a thorough discussion before both spouses reach a settlement. The end of a marriage becomes more complicated when there are substantial assets involved, such as a family business. In most cases, divorcing couples fight over their assets as if their lives depend on it.
When it comes to a family business, it is often difficult to divide it, especially if both spouses are involved. In most cases, one spouse will buy out the other and take control of the business. However, the buyout process often comes with a lot of complications, especially if the other spouse declines the offer and intends to continue being a part of the company. In that case, a valuation of the business is necessary to determine the value of the business and the business itself will be sold and the proceeds will be split. For the best results, it is important for a divorcing couple to reach an agreement as soon as possible and to avoid prolonging the process, otherwise, the business may end up losing its value.
However, the grueling process of splitting the business can be avoided if the divorcing couple drafted a business prenuptial agreement before they got married. The business prenup should contain clear instructions on how to deal with business assets in the event of a divorce. By doing so, a couple can avoid huge legal expenses, which often happens with a divorce that involves business assets.
If a couple is in the middle of a similar situation, it is best to weigh the options first before they accept an offer from the other spouse. Getting less than what they are entitled to is one reason why divorcing couples fight over such assets in court. With the help of an attorney, the divorcing couple can make sound decisions regarding their finances.
Source: CBS News, "Who holds onto the family business when couples divorce?" S.Z. Berg, Feb. 10, 2015