Dividing business interests in a divorce settlement
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Dividing business interests in a divorce settlement

| Mar 31, 2020 | Firm News

A lot of assets are at stake for a high-net-worth divorce in North Carolina. Separation can become distressing and taxing on a marriage as spouses must take inventory of everything that was co-owned and bought during the marriage. Besides properties and vehicles, it is essential for the divorcing parties to understand the controlling interests of their business liquidity.

At the onset of marriage, one spouse may have previously entered a business arrangement with the other spouse. The divorce process can make working together for future commitments cumbersome. In this aspect, it is vital to consider separating the business and legal responsibility from the opposing party.

Divorcing couples have two options to consider when splitting the controlling interests in the divorce. For example, one participant in the divorce may have joined the other spouse in establishing a business during the marriage. It happened that it was the other spouse’s hobby that became a full-fledged business. The opposing divorce party can simply sign away the controlling business interest to the other party.

An example of this scenario would be the divorce settlement of Jeff and MacKenzie Bezos, the founders of Amazon. As part of the divorce settlement, MacKenzie Bezos sold her controlling stake in The Washington Post to Jeff Bezos while keeping a minority stake in Amazon.

A divorcing couple could enjoy their business enterprise together if it provides a comfortable standard of living and is a business they thoroughly enjoy working together for mutual benefit. Therefore, they might like to maintain an equal interest in the company. The parties can enter into a contractual agreement where, toward the end of the business cycle, one divorced partner would sell the controlling interest to the other divorced spouse at an arranged time.

Many divorcing parties want to separate with one party selling their minority stake in the business. However, if there are liquidity issues, the opposing spouse may not able to fully buy out the minority stake from the other party. A lawyer may help the separating couple by arranging a contractual buy-sell agreement where the majority stake divorcing party would purchase the full controlling assets of the business at a beneficial time. Furthermore, an attorney may work to find undisclosed assets of a divorcing couple so that each marital party would have full access to the financial benefits from the dissolution of marriage.