On behalf of Gary Kirk of Kirk Montoute Dawson LLP posted in High Asset Divorce on Friday, October 23, 2015.
Marriage is certainly a major endeavor for couples to enter. Some married couples take it even further by going into business together. If that couple ever divorces and they have not planned ahead, the division of assets could be contentious and parties may be surprised at what they are entitled to.
During the life of the business the ownership structure should be addressed. While each spouse having an equal amount of shares is part of the puzzle, it is important to make sure the types of shares are the same. If they are not, it is possible that one party could have voting shares, entitling them to make decisions about the business, while the other may not.
In other words, married couples who decide to go into business together should take the same steps that most other parties in the situation do. These include creating shareholders agreements or partnership agreements. Such an agreement should include information such as who will be responsible for:
- Hiring
- Future developments in the business
- Borrowing funds
- How decisions will be made
- Who will take care of the business if a disagreement arises
The failure to take these steps could seriously impact the final divorce settlement.
There is no question that most people should work with a lawyer when they are involved in a divorce. This is particularly true when it is a high asset divorce and a family business is involved. While it is of course best that actions are taken to put an agreement into place regarding the business before problems arise, when this has not been done a lawyer can be of assistance in securing a favorable outcome.
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