Helping your business survive a divorce
The emotional and financial turmoil of a divorce can take its toll on any couple, particularly when children are involved. Add to the mix a relationship in which your spouse is also your business partner, and things can get quite convoluted.
Should you find yourself in this situation, facing divorce, and your spouse is involved in the business as an employee or perhaps a co-owner, it is imperative that you try to create divisions between legal, financial, and emotional issues.
This is easier said than done and enlisting the assistance of an experienced solicitor will help with this process.
Here are some tips on how to face such a situation:
Address the emotional fallout before emotions become the focus. When considering a divorce where a business is co-owned by the spouses, there may be certain agreements already in place such as a Binding Financial Agreement. In the case where there is none, it is imperative that you seek legal and financial advice straight away. Try to keep focus on the business at hand and put steps in place to keep the business running as the divorce will take an incredible toll on both parties. Attempt to keep at bay the emotional forces that could quite simply rip a business apart which one or both of you may have spent years building. Enlist the assistance of an experienced counselor sooner rather than later to help you navigate the emotional landslide that is likely occurring.
Secure the business. Work with the company’s accountant and your lawyer to ensure that lines of credit and other various business operations do not become interrupted. Spouses may be co-signers on loans or other accounts, and the withholding of a signature or other permission could be costly. Be sure to reach an agreement early with your spouse about the operation of the business during the divorce process. Whatever you and your spouse decide, it is important the operations of the business remain transparent to both of you. Perhaps involve a neutral third party to assist in this process, such as an accountant. Remember too, that in the event one spouse is an employee of the company that this position carries with it certain legal obligations.
Define Your Roles. As you redefine your relationship, you must draw clear lines around your roles and responsibilities at work. It may be a situation where you are true co-owners of the business and both of your roles are highly integrated into the company. Identify the unique skill set that each of you bring to the table and ask yourselves if you both can actually continue to work together in the business. The breakdown of the marriage could mean that you no longer feel comfortable working together and one of you must leave which could be detrimental to the business. In any event, it is important to put safeguards in place early to maintain the integrity of the business and to keep the confidence of your employees and customers secure.
Seek legal advice early. Find a lawyer that has the savvy to not only empathise with your matter, but who is aware of the intricacies of your business and how to work in conjunction with your accountant to facilitate the ongoing needs of your business. It is important that this lawyer be a driver of solutions and a facilitator of maintaining constructive communication with your spouse. Conversely, your lawyer should not hesitate to seek the assistance of the Court action should it be required to secure your interests.
Don’t do it alone.
Tackle this separation and all of its intricacies and emotional landmines with the help and assistance of professionals. A team approach is needed, from your lawyer to a good counselor or mediator, not to mention good family and friends who are not afraid to give you the advice that you need to hear. Your emotional well being is paramount as the business most likely cannot survive with directors who are emotionally compromised.
A Power of Attorney is an Important tool to have – especially now.
Your Business Checklist… are you ready? Power of Attorney is an Important tool to have – especially now. We are all anxious about the future. The challenges that coronavirus will bring are unprecedented, ever changing and daunting. However, there is something you can do now that could help you and your business if you end up needing to self-isolate or quarantine.View All News