Building and growing a company while you’re married can be a great source of joy and pride for a couple, but that same company might become a source of contention if the couple splits up. For some, trying to determine what to do with a family business is one of the more challenging aspects of a divorce.
Absent a prenup, you have to make some decisions about your company’s future
There are a few options that you have for the company if your marriage ends. If there’s a prenuptial agreement that covers the business, you’ll follow the terms of the prenup. In the absence of that, you and your ex will have to choose one of the following options:
- Close the company, pay the liabilities and split any profit that remains
- Sell the company and come to terms of what to do with the profit
- One person buys out the other person
- Continue to run the company as a team
In all of these cases, you need to ensure that the terms of the decision are clearly spelled out. This includes things like who is responsible for what liabilities if there are any, as well as how the profit will be split if that’s applicable.
If you and your ex decide to continue to work together to run the company after the marriage ends, your operating agreement needs to include factors. While they’ll depend on the specifics of the circumstances, these are some you might consider:
- Set duties and responsibilities for each party
- Outline pay, bonuses, profit sharing, time off, and similar points
- Plan for conflicts by setting resolution methods
- Write out communication standards
- Schedule goal-setting meetings
Your attorney can help you to ensure that you have the legal aspects of the situation under control. While you need to determine the fate of the business as quickly as possible, you and your ex should take the time to review the options before making the decision.