A Closely Held Business Complicates Divorce
Our clients include small business owners or individuals who have a partnership stake in a business. Protecting that investment and the business entity can be a significant challenge and a central conflict in divorce proceedings. The spouse has a vested interest (and considerable leverage), requiring strong advocacy and creative solutions.
Perry & Perry PLLP handles divorce and related matters of family law in the Twin Cities and throughout Minnesota. From our extensive background in business litigation, we have special experience with the complexities of divorces involving a closely held business. We represent either spouse in these scenarios.
Is There A Marital Property Interest?
Minnesota law presumes all wealth acquired during marriage is joint property, including business assets and any commercial real estate equity. If the business or professional practice existed prior to the marriage, the spouse is still entitled to a fair and equitable share of the marital value. Our attorneys can help you gauge (a) the spousal share, (b) the value of that share and (c) how it fits into the bigger picture of marital property division. Frequently, this involves business valuation specialists to put a dollar figure on what the company is worth.
A prenuptial agreement can override equitable distribution. We have litigated prenups as to their enforceability and scope. A newer business venture may or may not be covered by a premarital contract.
Do The Business Partners Have A Say?
A divorce in one’s private life can have a domino effect on business operations. For this reason, many partnership and shareholder agreements have a buy-sell clause which is triggered when one stakeholder gets divorced. Without a buy-sell, the spouse can essentially become a partner when the court awards him or her a share of the company. The clause forces a buyout of the spouse’s share, protecting the entity and the co-owners. We would get involved in those negotiations to make sure our client is treated fairly and equitably.
Dividing Business Assets Or Compensating The Spouse
The non-owner spouse could compel the stakeholder spouse to liquidate the business or cash in their partnership share. But nobody wins by killing the golden goose. Typically, the goal is to keep the business or partnership going and negotiate a comparable offset such as:
- A lump sum buyout or structured payments over time
- Higher alimony
- Possession and equity of the marital residence
- A larger share of the retirement savings
Sometimes litigation is unavoidable because of the nature of the assets or because one spouse is acting in bad faith. Shane Perry represented the wife of a business owner who was hiding assets and lying about his revenues. The multimillion-dollar case involved significant discovery and litigation of business valuation. In another case, one spouse owned automotive dealerships and we were involved on the back end in sale of those entities and splitting the proceeds.
Strategic And Cost-Effective Divorce Counsel
We always explore out-of-court resolutions to limit the risk, expense and acrimony of divorce. Where a closely held business is involved, we consider the impact on all the various parties to try to find a favorable solution. If litigation is required, you can be confident in our courtroom experience and our mindfulness of both your personal finances and your business interests.
Call our Minneapolis office today at 952-444-9903 or contact us online. Perry & Perry PLLP offers a free initial consultation and handles divorce cases throughout the Twin Cities and Minnesota.