Family-Focused Advocacy & Counsel
Responsive & Accessible Representation

banner image

The effects of divorce on small businesses

| Oct 27, 2020 | Divorce & High Asset Divorce |

Divorce takes a toll on families in many ways. It’s stressful and expensive to dissolve a marriage. What many people in Connecticut don’t realize, though, is that divorce can also have impacts on businesses. Anyone who owns a company or works for a family business should be aware of how to protect their business in a divorce.

Marital property and business

In many states, anything acquired during the marriage is considered marital property subject to division in a divorce. This includes everything from cash to stock. If someone is a majority stockholder in a company, that can cause problems. It means that they could lose half of their stock in the divorce. Effectively, they may have to be a de facto partner with someone they’ve just divorced.

Of course, there are ways around this kind of problem. It’s good to address these things in a prenup before any marriage takes place. When it comes to divorce, it may be possible to buy out your ex-spouse, or even sell your stock to them. This can prevent awkwardness at meetings in the future.

Solutions for small businesses

Entrepreneurs should consider putting their businesses in a trust. This can protect it because technically, they aren’t the owner. The trust is. It’s important not to do this right before or after filing for divorce, though. That can look like hiding assets. Anyone who is considering a divorce should contact an experienced attorney. A good lawyer will know how to handle a divorce where a business will be affected. They will understand how to negotiate and advocate effectively for their client.