Owning a small or family business can be an incredibly rewarding venture. Whether you started the company or inherited it from a family member, it is generally quite satisfying to work for yourself, knowing that you have the power to affect not only the day-to-day operations of your business but also its future success or failure.
As such, a small business can easily become one of the most contentious items to be divided in a divorce. Not only is it valuable in a personal sense, but it is also likely deeply intertwined in the family’s finances as well. To avoid any turmoil that is noticeable to both shareholders and customers, it is a good idea to decide how the business will be divided in divorce long before the marriage turns sour.
Specifically, couples should draw up specific partnership agreements that dictate what will happen to the business if they file for divorce. Those agreements should be revised every two or three years, or as needed to deal with any changes in the valuation or structure of the business.
In addition, the agreement should specify how the day-to-day operations of the business are managed both during and after the divorce. It may be a good idea to bring in a third party to manage the daily operations of the business until the divorce is finalized to ensure that customers remain unaware of any behind-the-scenes turmoil. Following the split, the agreement should specifically dictate which former spouse takes on which role, minimizing any additional disagreements that may arise.
Source: The Globe and Mail, “Divorces mess up firms as much as families,” Wallace Immen, June 4, 2012