Options for dealing with a business in a divorce

On Behalf of | Mar 26, 2020 | Divorce |

Divorce for business owners in West Virginia can mean having to decide whether to split the business or keep running it together. The latter can be difficult for many divorced couples, but it may be the only option if one spouse lacks the liquidity to buy out the other.

In that situation, one would probably continue actively running the company while the other person retained ownership without fully participating. The couple might need a put/call option. This allows the operator to purchase the company at an agreed-upon future time. The non-involved party may want the ability to veto certain fundamental changes to the company. The operator may also be required to be financially transparent with the other party and provide that person with certain financial documents.

In other cases, couples may continue running the business because they anticipate a significant financial gain or because they both enjoy it. These couples may want a buy-sell agreement. This can help ensure that the minority share holder still has an ownership stake that is marketable. Finally, if one individual buys out the other, it can be important to have a provision in place that allows the seller to be indemnified from any claims against the business. In general, couples should attempt to negotiate an agreement that is advantageous to both of them.

Couples who want to avoid the stress and expense of going to court regarding property division or child custody may want to consider mediation. Even in a high-conflict divorce, mediation can help people reach a resolution. The aim in mediation is to come to an agreement that satisfies both parties, which differs from the adversarial atmosphere of litigation. There may also be situations in which individuals might come to an agreement during mediation on some issues but must go to court to have others resolved.

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