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Challenges Facing Business Owners During Divorce

Business owners and entrepreneurs face unique challenges when entering into a divorce. Any business that one or both spouses own, or in which they may have an interest, will come into play in a divorce case. There are three main areas in which treatment of a business in a divorce can be particularly important.

1. Support Calculations

Whether you may face alimony payments or child support payments, personal revenue that you generate from a business will be a factor in a Massachusetts divorce case. All forms of revenue, salary, wages, bonuses, partnership or shareholder distributions, dividends, or other compensation can play a role in the support decision. In some cases, the Court might also consider expenses that a business pays for the spouse's or family's benefit. All of these factors will be considered in determining who pays support, what kind of support will be paid, how much will the payments be, and the duration of the payments.

2. Division of Marital Property and Debts

The treatment of a business in a Massachusetts divorce case rests on that business being classified as marital property. If the business is a marital asset, the parties must decide how it will be divided, whether they will continue to share any business interests post-divorce, or whether one spouse will buy some or all of the other spouse's interest. The following questions may arise:

a. What percentage of the business does either spouse hold?

b. What is the business's annual income?

c. What debts does the business owe?

d. What is its value?

e. How will you calculate the business's value?

f. How will you practically divide the business/value between the spouses?

You may need an expert business appraiser and/or a certified public accountant to help answer these questions. This is a complex process that requires sharp thinking and thoughtful planning. You will get more specific answers and direction by speaking with a knowledgeable attorney.

3. Protecting Business Relationships

It is never too early to take precautions that protect business owners, spouses, and the business itself. Parties can do this with prenuptial agreements, postnuptial agreements, shareholder, partnership or other ownership-related agreements or other contracts. Business owners also can discuss exit strategies and means of handling business matters during a time of transition with their attorney and business partners.

Business owners may have a lot at stake in a divorce. SederLaw has provided over 100 years of legal service to individuals and business throughout the Commonwealth of Massachusetts. Our family law and probate clients benefit from our firm's collective, and extensive, experience. When a case presents legal issues that overlap, for example, with real estate, tax issues, employment issues, business and finance, trusts, estates, pensions, bankruptcy, or other tax and estate planning matters, our clients receive quality legal advice from our entire legal team.

Thumbnail image for SederLaw-Jeff-Greenberg.jpg

Jeffrey P. Greenberg, Partner
Family Law & Probate Litigation Department
Seder & Chandler, LLP
339 Main Street
Worcester, MA 01608
Tel: 508-757-7721 (x102)
[email protected]

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