What happens to a business during a divorce

On Behalf of | Apr 3, 2017 | High Asset Divorce

When Minnesota couples start a business, they expect to be able to continue running it together without worrying about what could happen if their romance ends. While couples can potentially discuss a contingency plan, where one person agrees to exit the company, talking about splitting up the company when things appear to be going so well can be an uncomfortable discussion. However, the business could potentially become a problem if couples do not take steps to protect themselves.

TransPerfect, a translation-software company based in Delaware, was founded by a couple who got engaged in the mid-1990s. While the former couple never married, they both worked diligently to create a thriving business that employed about 3,500 people. Eventually their romance ended. Because they did not have a contingency plan, they both continued to attempt to run the company but were unable to do so. The founders of the company eventually went to court over the matter. The state legislature ultimately took the case as, under Delaware law, the company could be sold if the founders cannot reach an agreement.

To prevent future problems should a relationship end, it is recommended that owners take specific steps to protect the business. This includes ensuring that business and household finances remain separate and creating a contingency plan in the event things go south.

If a couple creates a business together and there is no agreement regarding what could happen to it in the event of a divorce, the business will be divided up along with any other marital property the couple has obtained. A high asset divorce attorney may assist with negotiating with the other party if a person wants to continue owning and running the business. This may mean offering the family home and other larger assets, such as cash. If neither individuals want the business, the attorney may arrange for the business to be sold.