Can You Keep Your Business Running After a Divorce?

Can You Keep Your Business Running After a Divorce?

Jul 11, 2022
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Divorce has a multi-dimensional effect that touches on social, physiological, and economic aspects. As a business owner, it’s essential to understand the potential impact a divorce can bring to your enterprise.

 

In the case of division of assets, can the other spouse agree to sell their shares, and will that affect business liquidity? On the other hand, it can lead to disruptions through poor communications or negative press, which can erode the brand and reputation.

 

That said, it’s healthy to engage a Southlake divorce lawyer from Mims Ballew Hollingsworth | Family Law who’ll facilitate a seamless process to keep your business running.

 

How Divorce Affects Your Business

 

Fundamentally, the business structure has a bearing on the impact of the divorce on the business. The structure of many small businesses are not well defined compared to LLCs, making it more vulnerable during a divorce.

 

Here are further ways divorce affects business:

Division of Assets

All assets acquired during the marriage are regarded as marital assets. On the other hand, a business that you owned before marriage is considered personal property. That said, a business that qualifies as a marital asset runs a risk of sale after the divorce.

Dissolution of Business

 

Divorce can contribute to the dissolution of business in the following ways:

 

  1. Shifting focus which can contribute to the neglect of business
  2. When couples are equal partners and resolve to dissolve the venture

 

Disruption of Operations

 

Divorce involves a lot of work and is equally emotionally draining. First, as a director, you’ll lose focus, leading to poor communication and reduced productivity in your workforce. Your partner could also become an ‘uninvited guest’ in the firm after the divorce leading to disruptions.

How to Protect Your Business After Divorce

Keep Accurate Records

A divorce lawyer will rely on available records to mount a strong case. It’s therefore advisable to keep records of your sources of capital, whether personal or marital. In addition, separate business and personal records. Lastly, keep records of all cash transactions in the business.

Payment of Salaries

The court can order you to pay a higher contribution to obligations based on business salary. It’s, therefore, crucial to reimburse yourself using a fair market rate. On the other hand, pay your spouse a fair market rate to avoid a court ruling against your favor.

Prenuptial and Postnuptial Agreements

You can opt to sign a prenuptial agreement that expressly states that certain assets belong to you alone and cannot be shared in case of divorce in the future. Alternatively, you can consider signing a postnuptial agreement soon after marriage. Typically, postnuptial agreements expedite a divorce using pre-established settlement factors, reducing business disruptions.

Create a Provision for Divorce in LLC or Partnerships

You can create a plan, e.g., a buy-sale or shareholder agreement that stipulates what will happen in case of divorce. Remember, it’s simply a contingency measure that doesn’t alter the percentage of ownership.

Talk to a Reputable Southlake Divorce Lawyer Near You

Keeping your business running after a divorce enhances your financial independence. It’s advisable to foster a working relationship with an attorney who can advise you on how to protect your business. Mims Ballew Hollingsworth | Family Law has over 75 years of experience in divorce matters serving couples in Southlake, and nearby. Contact us today to learn more.

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      I highly recommend this law firm. I have had Brian and Kelly both represent me in now three seperate cases. They are men of integrity that are very prompt to answer questions and get back to you on important matters. They have always been well organized and stayed on top of the important information relevant to my cases. ...

      Loyd Camp
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      Timothy Alexander did an exceptional job handling my divorce case. He was extremely prepared, very informative, and he made sure I was always kept in the loop. His professionalism, guidance and empathy tremendously helped during what could have been a much more difficult time. I was so pleased with the final outcome and ...

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      Highly recommend this law firm. Andrew McAlester goes above and beyond for his clients. He’s very resourceful and prompt in communication. I always refer Mr. McAlester to my family and friends in their time of need because I trust his judgement and I know he has his clients well being at the forefront of everything.

      William Hawthorne
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      Tim Alexander represented me during my divorce. His compassion, empathy and communication during the process helped keep additional stresses out of an already stressful situation.

      C Grucza
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      I highly recommend this firm. I mainly worked with Andrew McAlester. Andrew was super helpful and courteous during a very stressful situation that I found myself in. Thanks for everything!

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      Timothy Alexander is an amazing lawyer. He helped me with everything I needed to do to get my divorce final in a very short period of time. I always try to refer to him when anybody asks for a divorce lawyer. Thank you for everything you’ve done.

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      Kelly & Brian helped us in our child custody case and I am very pleased by their work. Our case ended up last almost 2 yrs due to COVID, however they were very easy to communicate with and constantly kept us up to date on our case and the courts. I would highly recommend them if you are needing a great custody lawyer ...

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      Mr. Alexander was the utmost professional. He was timely in his communication and very thorough in his answers. His approach helped make a difficult situation tolerable. One thing I greatly appreciated is that he did not just tell me what I wanted to hear. He would offer suggestions and allow me to make the final decisio ...

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      Kelly & Brian were amazing attorneys. I came to them when I really needed help with child custody issues, and they were committed to reaching the best possible outcome. I am writing this to express my most sincere thanks, and gratitude for their professionalism. They stuck by me through the last year in dealing with ...

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      Things happen and you need someone to tell it to you straight. Andrew McAlester is someone I trust to help me navigate through these difficult times.

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