When business owners are going through a divorce, they might want to consider the ownership of their company. There are problems that need resolution when a Florida couple negotiates a divorce settlement. If they do not do this, the future might hold problems relating to the company as well as the ex-spouses.
The settlement should confirm any transfer of rights, according to law sources. Some of the common rights that may receive mention include the following:
- Receipt of dividends and distributions
- Contributions to retirement
- Health benefits
- Deferred compensation
- Reimbursement of expenses
Language should make clear what these rights are that are being transferred. The transferring spouse will no longer have any part of the business.
Release of claims
Both partners sign a mutual release of any claims as of the divorce date. They will also need a release from the actual company, since the divorce is between two people, not the company, as processed through a family law court. This will prevent future claims by the company against them as transferring husband or wife.
More than just the release
After the company signs the release, the transferring spouse should also seek an an indemnity from the company. This gives protection in the event that the spouse has a citing as party in a lawsuit. It might be in the future, so this indemnity may be necessary.
The indemnity asks the company to pay for counsel for the transferring spouse. The company must also cover any liability that results in future litigation.
Non-compete agreement
The receiving spouse, if they think their former spouse might end up as a competitor, can ask for a non-compete agreement at the time of the divorce. This agreement also protects trade secrets and confidential information.
Ownership of a business at the time of a divorce requires a transfer and release of claims. The company, as well as the divorcing partners, might need a seat at the negotiating table to prevent future problems.