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Settlement options for divorcing business owners

Chances are that some Maryland couples who own businesses together will go through a divorce. Because it could represent a married couple's most significant asset, a divorce could disrupt the entire business or inflict financial difficulties. Ideally, a prenuptial agreement would guide the division of business assets, but other approaches, such as a buy-sell agreement or a property settlement note, could achieve acceptable outcomes.

A prenuptial agreement signed willingly by both parties could allow a couple to split a business without lengthy litigation if the subsequent marriage doesn't work out. The agreement might specify how to value a business and the method by which one party might buy out the other. It is advisable for each party to have separate legal representation if this method is under consideration.

A buy-sell agreement could be designated within a prenuptial agreement or negotiated separately among co-owners prior to a divorce. This contract sets forth how one party would sell his or her ownership interest to the other party. A property settlement note provides a means of buying out one co-owner if liquid assets are not available for the purchase. It is a loan that allows one ex-spouse to buy out the other person over time with interest. The possibility of selling a business outright and splitting the proceeds between the ex-spouses remains an option as well, but completing a sale quickly might be difficult.

A business owner contemplating a high-asset divorce may want to meet with a family law attorney to see how it will affect the future of the company. In some cases, an agreement can be negotiated that allows one of the parties to keep the entire company in exchange for the other party receiving assets of comparable value.

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