"A divorce is a substantial economic event even without a business," Friedman says. "The smartest [business owners] start with financial planners to figure out how this is going to work before they bring in the divorce lawyers." Sometimes, he says, the CPAs, business lawyers and divorce lawyers work together to forge the best possible agreement, then present it to the judge for approval. "The court doesn't have time to finely craft a solution," he notes.
It's easier when there's a partnership, shareholder's or LLC agreement in place ahead of time that includes formulas for how to value the business and how to arrange a buyout in the event of the death or withdrawal of an owner. The same goes for prenuptial agreements, which are more common these days. Most people contemplating marriage don't want to think about divorce, but a prenuptial agreement could save your business.
"Hire good lawyers," Herman advises. "Negotiate and resolve, and maybe you can avoid your business becoming a casualty of divorce."
Steven C. Bahls, dean of Capital University Law School in Columbus, Ohio, teaches entrepreneurship law. Freelance writer Jane Easter Bahls specializes in business and legal topics.