Can Divorced Exes Remain Partners in Business?
Business owners in Pennsylvania who are seeking a divorce may be encouraged to hear that it is possible to remain business partners even while dissolving the marital relationship. According to U.S. Census Bureau statistics, 3.7 million small businesses are owned by married couples. Many of them face divorce each year, placing their businesses at risk as emotions interfere with corporate decision-making and cash flow. For some businesses, it is impractical for one spouse to buy out the other spouse’s interest upon divorce, forcing the businesses to be sold or liquidated. But a new study shows that some couples are capable of sustaining their jointly-owned businesses after divorce by keeping business matters separate from the personal.
Kit Johnson of Capella University, who conducted the study, confirmed that divorce is often a business-killer. However, divorcing couples who are still “good together” in business may not have to divide or sell the company when they dissolve their marriage. Ex-spouses who are capable of respecting and trusting each other — if only for business purposes — may be able to continue running their business together even after they get divorced. First they must settle their divorce, since Pennsylvania courts rarely allow divorcing spouses to continue to share ownership of a business.
One of the keys to a successful business collaboration after divorce is a well-crafted marital settlement agreement. A settlement agreement for divorcing business partners must resolve key issues, such as the employment of each ex-spouse, their compensation and benefits, voting rights, and the consequences of a business merger or sale, or death of one of the exes. Ex-spouses who intend to keep running their business together may want to ensure that their interests will pass to their children or grandchildren as part of a joint estate planning and business succession plan. Often, employment agreements, shareholder agreements, trust agreements, and security instruments are important elements of the divorce settlement.
Divorcing business owners must seek the services of a capable Pennsylvania family lawyer to negotiate and draft an effective marital settlement agreement that will preserve a family business. Having good legal advice may help business owners to preserve their business legacy even after the romance is gone.
Source: Yuki Noguchi, “When Divorce Leads To A Happily Ever After For A Small Business,” National Public Radio (NPR), April 17, 2014