If a business is involved in the divorce, your agreement needs to specify who receives the business and how it will be managed after the divorce. Usually, one party or the other gets total control over the business, but I’ve seen divorcing couples remain business partners.
If one party is to receive the business, the agreement needs to specify if the other spouse is obligated for any debts or taxes, or if he or she receives any of the ongoing profits of the company. It also needs to specify who will pay any future debts and taxes associated with the business. If the company is successful, you will want an independent accounting of the books and records to determine its true value before finalizing the settlement.
More tricks are played around the value of a family business than almost any other asset of a marriage. It’s interesting that the party running the business during the pendency of a divorce seems to believe the company is worth so little. For example, a business owner might claim the last three years were the best years ever for the business, and that it is now likely to suffer a significant decrease in income just at the precise moment that the divorce is granted. An owner might claim that the market is way off and sales are suffering. This same business often begins to prosper again right after the divorce.
Businesses should be reviewed very closely, due to the potential for managers to drastically affect the income figures during the divorce.
From Successful Lone Star Divorce, the regional bestseller by Dallas divorce attorney Ike Vanden Eykel. Ike Vanden Eykel is managing partner of Koons, Fuller, Vanden Eykel & Robertson.