Many people in Tennessee and elsewhere understand the emotional, financial, and even physical impact divorce can deliver, whether due to personal experience or because they have supported someone close to them going through this life-changing event. Most people involved in the divorce process face many difficult decisions. Couples who co-own a business and have decided to end their marriage have additional aspects to worry about, as divorce can negatively impact a business in many ways. Even happily married couples are smart to understand these impacts and do what they can to protect their business in the event of divorce.
Potential Impacts of Divorce
For one, often, people going through the divorce process find their workday frequently disrupted due to time-consuming and distracting demands, such as court appearances, correspondence with lawyers, and even the need to search for necessary documents. Partners and/or employees of the company may also be impacted by the divorce. For example, a spouse who has been a vital person in the daily operation of the business may choose to quit in the event of divorce, or he or she may decide to stay with the business, potentially causing an uncomfortable working environment for everyone. In some cases, circumstances may result in a dissolution of the business.
Steps to Avoid Problems
To prevent or mitigate these risks to their business and for peace of mind, business owners are wise to prepare a prenuptial or postnuptial agreement that addresses how the business will be dealt with in the event of divorce. This document can clarify the methodology used to value the business at the time of divorce, as well as many other important factors. In general, married business owners can protect their business by following several business practices, such as keeping business and personal expenses separate, paying themselves (and spouse, if he or she is an employee) a fair market salary, and maintaining detailed records of any cash transactions.
Without a doubt, every person entering a marriage wants to believe it will never end, but unfortunately, reality indicates many do end in divorce. While happily married, and even prior to the ceremony, Tennessee couples are smart to prepare for the possibility of divorce, especially if a significant asset is at stake, such as a business. Many couples find an experienced family law attorney can be a valuable resource when navigating all aspects of the divorce process.