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Divorce and business buyout agreements

On Behalf of | Mar 30, 2017 | Divorce

An Arizona married couple that runs a business together should take legal precautions in case their marriage falls apart. A broken relationship could break a business unless the partners have already defined how to divide their business assets and duties with a buyout agreement. Otherwise, the couple might fail to agree on terms in a divorce and force a court to decide the fate of the business.

The deteriorating relationship between the man and woman who founded the company TransPerfect placed 3,500 jobs in jeopardy. Their inability to come to terms forced a court to order the sale of the business. In another example, a woman who started an online diaper business lost the operation to her ex-husband in divorce court and then had to buy it back.

To prevent or reduce these problems, married business partners and any business partners for that matter should create a buyout agreement when they start an enterprise. Although this task might feel as unpleasant as creating a prenuptial agreement, the establishment of a legal plan for business separation could head off future disputes. Partners could outline how business and personal assets and spending will be kept separate and make arrangements for how a person concludes a management role and collects compensation for an interest in a business.

A person who owns a business with an estranged spouse could obtain legal representation when dealing with property division. In the absence of a prenuptial or postnuptial agreement covering the matter, the court will determine the fate of the company unless the parties can somehow come to an accord through negotiations or mediation.