It happens all too often: when forming a business partnership, partners neglect to vet their marriages because they don’t see the point. After all, isn’t there a clear division between one’s personal and professional life? They realize too late that a divorce can shake the foundations of a business, affect its day-to-day operations and ownership structure, and generally disrupt its growth and progress, that is, if the right measures are not put in place to prevent such a scenario.
In the asset division process of divorce, a spouse can fight to receive a share of his or her ex’s business. In other words, if your partner gets a divorce, his or her ex spouse may essentially be handed the keys to your business.
This sounds terrible, right? An unwelcomed guest with little-to-no business management experience comes barging in, asserting his or her voice in your business decisions, and brings down your net worth along with that of the whole company.
Thankfully, there’s a way to prevent this.
In your partnership agreement, be sure to include a contingency for divorce which requires a partner’s spouse to sell his or her awarded interest back to the company. The provision should include comprehensive directions on how shares will be valued and what funds will be used to purchase back the interest. Once the “right to purchase” has been drawn up, it should be agreed upon by all non-partner spouses in writing so it can be upheld in family court.
To ensure that your business stands up against life’s many challenges, you should set up legally binding plans not only for divorce but also for illness, disability, and death. The experienced New York business law attorneys at The Internicola Law Firm, P.C. can lend you guidance on these complex matters and help you set up your business in a way that it will remain secure in face of any future obstacles. Call us today at (718) 979-8688 for more information.