You are a professional who is partnered with one or more colleagues in a business. You and your spouse are about to divorce. You (and your business partners) are very worried at the way the divorce can impact your business practice.
What do you need to do? Will your spouse really be able to winnow “their share” of the thriving practice despite not having ever invested any financial or “sweat” equity into it?
Review your business structure
Did you form your professional partnership prior to getting married to the spouse you will be divorcing? Did your spouse ever sign off on a prenuptial or postnuptial agreement forsaking their interest in the business partnership?
Read over all of your business formation documents. You may glean the way membership interests are handled in a transfer or whether those interests must be sold back to the partners in these type of cases.
Know what you don’t want
It’s highly likely that neither you nor any of your professional partners want is the non-involved spouse to be left with voting rights or otherwise able to dictate how the business is run. Then, use other marital assets as bargaining chips to prevent your worst-case scenario from arising.
What is your liquidity?
Could your business take the hit if sudden liquidity were needed to buy out your spouse? How would your partners react to this solution? Find out now.
In divorce, valuation is vital
Never open negotiations in a divorce until you have an accurate value for all of the marital assets. This is especially important when ownership interests of professional partnerships hang in the balance.
Protect what you can
It might not be too late to preemptively change from preferred to common stock shares for the company. This could potentially eliminate voting rights transfers and lower the value of a spouse’s interest.
Work closely with your family law attorney
You definitely don’t want to try to end a marriage on your own if you have complex assets like interests in a professional partnership to divide. There are far too many things that could go catastrophically wrong for you. Your Saint Clair Shores family law attorney can help you achieve the desired goals with your property settlement.