When a married couple or partners in an adult interdependent relationship are also in business together, the breakdown of the relationship can become especially complex. In addition to the stress a divorce or separation can place on each party’s personal and home life, a separation among business partners also has a significant impact on each person’s livelihood and raises questions regarding the future of the business itself.
At Mincher Koeman, our lawyers are uniquely positioned to serve clients looking to separate from or divorce a spouse who is also a business partner. The founding partners of the firm, Lynsey Mincher and Andrew Koeman, began their legal careers practicing criminal law where they each worked extensively in matters relating to white-collar crime. As a result of that background, they have each honed their skills with respect to financial disclosure, the valuation of assets, and the interplay of tax consequences, which become key when a divorcing couple is required to sell or divide their business, or one partner chooses to buy out the other. Their experience in this regard allows our firm to provide insightful guidance to our clients with respect to matters relevant to the business, including ensuring negative tax consequences are not incurred, in addition to the usual family law concerns.
At the start of a business or marital relationship, it is always prudent to have a plan in place for the potential end of the relationship, especially when the two are intertwined. Contingency plans can be decided on and put into place in advance through the use of a shareholder or partnership agreement, and/or a domestic agreement such as a marriage contract. For clients who are married or in a relationship and are looking to enter into a business together (or vice versa), we will draft a thorough and carefully considered domestic contract addressing our clients’ preferences with respect to what a potential future split would mean for the business. Will it be sold off? Will each party grant the other the right of first refusal to buy the other out? Our lawyers will walk their clients through each step and available option so the agreement accurately and completely reflects the wishes and desires of both parties.
Our lawyers are also skilled and experienced in assisting clients who are entering into a relationship, while already owning or running a successful business or startup. We will review and gain a full understanding of the business’s operations and potential for future growth and carefully draft a prenuptial agreement to protect and preserve the client’s hard work and business interests in the event of a future relationship breakdown.
In cases where one party decides to buy out the other’s interest in the business, or if both parties decide to sell to a third party, the value of the business and its assets must be determined. If one party is buying out the other, it is important that the valuation is accurate and not impacted by hurt feelings or malice. Different values can be attributed to a business and at Mincher Koeman our lawyers understand the differences in the valuation methods and types of businesses involved from professional corporations, which may derive their value largely from goodwill, to farms, holding companies, or ongoing businesses with assets which need to be valued. Divorce can be an emotional minefield. It is important to have a knowledgeable and trusted legal representative who can assist with determining an accurate and fair value of the business. Our lawyers are more than qualified to assist in this regard and have established relationships with valuation experts who can provide further guidance in highly complex matters if necessary.
In cases where one spouse is a business owner and the business is not matrimonial property, the valuation of the business and retained revenue may come into play for the purposes of support. If, for example, one spouse forewent a career in order to allow their partner to focus on building the business, they may be entitled to financial compensation for their contributions.
Similarly, in cases where only one spouse is the business owner, but the business is considered matrimonial property, the valuation of the business and retained revenue will still remain important for the purposes of determining the total value of the asset. However, the contributions of the non-owner spouse become a critical consideration in determining whether it would be equitable for the value of the business to be divided equally with the non-owner spouse.
At Mincher Koeman, our family lawyers are dedicated to providing trustworthy and insightful guidance to their entrepreneurial clients in complex separation and divorce matters. Our experience in asset valuation and financial matters allows us to act as a guide through the complicated process of selling or dividing a business. Further, we can assist with preventative planning measures through the creation of detailed and well-planned domestic agreements. Please contact our office to make an appointment to discuss your matter with one of our lawyers today by calling us at 403-910-3000 or by contacting us online.
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