February 2013 Bar Bulletin
Business Owners Need a Plan in Event of Divorce
By Marguerite Smith
As a veteran divorce attorney whose practice focuses on closely held business interests, I have seen numerous, woefully inadequate shareholder agreements and prenuptial agreements come across my desk. When a divorce situation confronts the shareholders, these agreements, almost without exception, leave the business owner under protected or unprotected.
Generally, the closely held business is the largest asset of the divorcing couple. Some business attorneys have paid such little regard to divorce-related provisions that even their wording does not make sense.
Divorce is probably the most frequent reason the time-worn shareholder agreement is dusted off and reviewed. If this is the case, the divorce provisions may well be the most important language in the document.
It is understandable that closely held businesses receive poor treatment in divorce. The subject crosses many interdisciplinary boundaries. A business attorney, for example, may have little or no experience in divorce law or tax law as it relates to divorce.
Recognizing this interdisciplinary gap, I wrote a book on the subject, The New Standard: Marriage/Divorce - Protecting closely held businesses. This book pulls together relevant, interdisciplinary information that business attorneys, estate planners and divorce attorneys need to know.
The brief self-test below is designed to help you assess your divorce-related interdisciplinary capabilities.
When you draft your shareholder agreements do you:
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