How divorce may affect business owners
When a couple in California gets a divorce, if one of the spouses is a business owner, there could be serious implications for the enterprise. The owner may carry the emotional and financial stress into the workplace and take it out on employees. In other cases, the owner may be in danger of completely losing the business.
This is what happened to one woman who owned a financial advisory business that she brought her husband into in the last few years of their marriage. Since it appeared as though all the business income went to her, she faced paying child support to her husband. She knew she could not afford it, so she gave him the business in exchange for keeping the home and getting custody of their children.
Business partners can also be affected. Ideally, there will be an agreement in place, such as a buy-sell agreement, that outlines what happens to the firm in case of divorce. This can protect the partners from suddenly having an ex-spouse as part owner of the company. However, if there is no agreement, the other partners might have to buy out the person who is getting a divorce. This happened to several owners of a Tennessee-based enterprise that, in order to buy out a divorcing partner, had to borrow money.
Individuals who are thinking about getting divorced might want to speak with a lawyer about what to expect financially. In a community property state like California, joint property is generally supposed to be divided equally unless the couple has a prenuptial agreement. However, a couple might agree to another arrangement in which each person gets assets of roughly equal worth. This means a business owner might give up a home, a savings account or another piece of property in exchange for keeping the company.