Dissolution of Civil Unions for Small Business Owners

Dissolution of a civil union can be especially complicated for small business owners. On a personal level, divorce is likely to distract a business owner and consume valuable time. Legally, there are many scenarios where a small business will be considered an asset in the union estate and subject to division. The repercussions of this can be broad and potentially damaging.

A small business owner must address a variety of problems when facing a divorce. First and foremost, it is possible that a court could find the small business to be union property. There are circumstances where a business that began prior to the civil union may be found to be union property. Even family businesses may become union property. Where a family business that existed prior to the civil union is handed down to a son or daughter through a restrictive stock transfer or other forms of conveyance, that transfer or conveyance during the civil union would likely be treated as a gift to the union estate. That gift to the union estate may be subject to division upon dissolution.

The valuation of a small business may also prove problematic. Courts will consider business valuations in determining the division of union assets between the parties and the ability to pay, or need to receive, maintenance and/or child support. Further, if the court determines both parties have an ownership interest in the business, the business value will play an important role in any distribution of union assets or buyout offers between parties, assuming that the parties settle before trial.

A business owner must also consider the effect that maintenance and child support payments may have on his or her cash flow and liquidity. If these payments are not properly structured, a business owner may face financial strain.

Last, business owners bear the large responsibility of running and maintaining a business. A poorly-managed divorce has the potential to drain the business owner of his or her time and money, both of which are valuable assets for any small business.

Small business owners should only work with attorneys who understand the complexities of their situation and their unique needs. While a small business owner’s divorce will proceed through the same legal channels as a regular divorce, the final agreement will likely be dissimilar from a standard civil union settlement agreement.