Things to Consider When Divorcing a Business Partner in Tennessee
Experienced Franklin TN business lawyer explains legal issues involved
Divorce is complicated even when you have just a home between you. Throw in a business, and things can get very contentious and very sticky fast. One partner may not want to give up the business, or one partner may not be willing to sell for a reasonable price. I’ve seen many things in the many years that I’ve been helping TN residents get divorced.
When most people get married, they aren’t thinking about getting divorced, so they don’t think about signing a pre-nuptial agreement. Likewise, when most people start a business, they are so excited about the new endeavor and their future prospects that they don’t think about what will happen if the business has to be dissolved – such as in the case of a divorce.
The primary dispute when a divorcing couple owns a business together is, of course, who will retain ownership. I help my clients determine their goals before we move forward, and I ask them if they want to keep the business, and if so, do they want to retain sole ownership of it. Otherwise, would they be happy selling off their share of the business or selling the business together and splitting the profits?
If you want to keep your business, you would need to show why you have a stronger legal claim to it. For example, you might show that you put in a larger share of the startup investment through a personal inheritance, or you might show that you came up with the idea or put in the majority of the work getting it started or keeping it running. If your spouse is committed to also keeping the business, you could be in for a fight.
When outright ownership cannot be granted to one spouse, I usually advise my clients on options such as buying out the soon-to-be ex or selling the business and using the money to start over. In these cases, I work to get a fair evaluation of the business to ensure that clients do not overpay for the privilege to take back control of their own business.
All of these discussions assume that the business is financially solvent and does not owe any debts or have any outstanding disputes with partners or suppliers. If there are issues like these, they also need to be cleared up before the divorce and the business agreement can be finalized. That may mean that one of you has to agree to settle the debts (or that you have to sell the business to settle them), or it may mean that you have to resolve your legal disputes or put parameters in place for how these disputes will be handled after the divorce.
In some cases, one spouse may have owned the business before the divorce, but the other bought in or was given a share after the marriage. Or one spouse may be an actual employee of the business. These are issues you must work through with an experienced Franklin business lawyer during your divorce.
Whatever your specific circumstances, divorcing when you own a business together or share an interest in one is going to be complicated. You must work with the right attorney to protect your interests and your legal rights. Otherwise, you are putting your future on the line – both in terms of what you will get (or won’t) from your business and what you might not get out of your other assets because of your share in the business.
I’m Judy A. Oxford, and I’m an experienced Franklin business lawyer who has been helping couples navigate this complex terrain for many years. Call my office at (615) 791-8511 or use the secure online form to schedule a free consultation. I will give you a realistic understanding of your legal rights and challenges so you know what you need to do.