Minnesota residents who co-own a business with a spouse or soon-to-be spouse should be aware of how to protect their family business in the event of a divorce. This may be particularly important if the business has increased in value over the years or if the owners have a majority of their net worth tied up in the business.
A prenuptial agreement can be used by couples who have yet to get married. It can detail what will happen to the business during a divorce. However, to avoid a subsequent challenge, it should be negotiated and signed well in advance of the wedding date. It is also advisable for each party to have separate legal counsel.
In lieu of a prenup, engaged couples may want to complete a buy-sell agreement. It is a legal contract between the co-owners that specifies what should take place if one of the owners voluntarily leaves the business, is forced out or dies. For divorces, an ideal buy-sell agreement could require a former spouse to sell back to the co-owners any interest or shares of the business that was received in the divorce settlement.
Estranged couples may opt to remain as co-owners. However, this option may present complications if the divorce is contentious. For those that do choose this strategy, it is important that a shareholder agreement is created so that either party may buy out the other at an agreed-upon price.
A family law attorney may work to protect a client’s interests at the end of a marriage. As property division can often be a contentious issue, an attorney might assist in negotiating an appropriate settlement that can be submitted to the court for its approval.