When Milwaukee couples come to a mutual decision to divorce, they might also expect to be able to reach negotiations regarding child custody and property settlements with little interference from a third party. However, when complex issues and high assets are at the center of discussion, negotiations often become very complicated.
One small business owner discovered how complex the divorce process can be after he failed to take precautionary measures before marriage to protect his firm in the event of a divorce. As a result, it took more than a year before the man and his ex-wife were able to reach a divorce settlement, and the process nearly destroyed his business.
The business owner commented that his divorce was “painful” and “costly” for many reasons. In states such as Wisconsin, a small business may be considered marital property. If this is the case, business owners risk dissolving the business by splitting the interest with a spouse, or one spouse could buy the other out. The business owner commented that so much time was spent on retaining his business in the divorce that he lost focus on his consulting firm.
In fact, he believes that his consulting firm lost more than $200,000 in potential business. Fortunately, the man was able to retain his business in the divorce and he eventually turned the company around. However, many attorneys who deal with high asset divorce cases commented that without taking certain measures to protect one’s business in the event of a failed marriage, individuals could see their businesses go under as well.
In order to prevent one from losing his or her small business because of divorce, individuals have several legal options that they can explore. Before marriage, business owners may want to consider preparing a prenuptial agreement to detail what should be considered marital assets or what each spouse agrees to be entitled to if they ever divorce.
Another option is to prepare a buy/sell agreement which helps owners create a plan regarding what should happen to their business and how ownership should be determined in the event of certain triggering circumstances such as a divorce.
Although Milwaukee couples may understand that their marriages cannot be saved, they can take precautionary measures to ensure that they don’t risk losing their business as well.
Source: Reuters, “Divorce has “immense” impact on small businesses,” Deborah L. Cohen, Sept. 28, 2011
