Handling a family business during a divorce

Pierre Domercq Divorce

California business owners who get divorced could find their business affected by the split. Even before tying the knot, it might be a good idea to put protections in place for a business just in case a divorce happens down the road.
For couples who aren’t yet married, a prenuptial agreement can shield a business from a messy divorce. This agreement can delineate in advance what happens to the business if the couple should split. If the couple is already married and it’s too late for a prenup, they might want to consider a plan to continue to co-own the business after the divorce. This will typically work best with former couples on amicable terms. In such cases, a shareholder agreement is a good idea to give each former spouse the option to buy out the other.
Protecting a family business from divorce might not necessarily apply to the couple that started it. If a business owner is planning to pass on the family business to the next generation, they may want to take extra care to protect the company in case their child gets a divorce. Passing the company down in a trust can prevent the business from being divided in divorce proceedings.
For couples who already have a running family business and are going through a divorce, it may make the most sense to sell the company and split the proceeds. A family law attorney may be able to represent a client during negotiations and divorce proceedings that involve dividing a family business. A lawyer could also assist with drafting a prenuptial agreement to help protect a business during property division later on.