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What may happen to a business in a divorce

When people in Georgia get a divorce, if one of the spouses owns a business, it could be at stake. The divorce can have implications not just for the owner but for any business partners as well as employees.

A buy-sell agreement created when the business is formed can address some of these issues, but some people are unaware of the need for one. This was the case for one man whose three business partners had to borrow money to buy him out when he got a divorce. A buy-sell agreement would have outlined the plan in case of divorce, including how to assess the company's value. It can also limit how much ownership the spouse can claim. However, a court still has the opportunity to determine whether the agreement is fair.

People who are sole owners or own the company with their spouses may lose the company altogether. This was the case for one woman who ran a financial advisory business. She could not afford to keep the business and pay court-ordered child support to her husband, so she let him keep the company while she kept their home and got custody of their children. Business owners should also be aware that they might be carrying the stress of the divorce into the workplace. This could affect employees.

These outcomes are not inevitable. Some couples may have a prenuptial agreement that addresses what happens to the company. In other cases, the business owner may keep the company in exchange for other assets. This could reduce the complications involved in dividing other property as well, such as a pension account or a home. Mediation may help some couples reach an agreement on property division. Unlike litigation, which can be adversarial, it is focused on finding a solution that will suit both parties.

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Hecht Family Law
12600 Deerfield Pkwy
Suite 125
Alpharetta, GA 30004

Phone: 678-926-9234
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