3 Tips for Navigating a Family Business and Divorce
It was nineteen ninety-seven, and Karen Soh was in a difficult position.
Her marriage to her husband, Steven, was on the rocks. She knew that it was only a matter of time before one of them asked for a divorce. She had thought about asking for one herself a number of times, but one thing kept holding her back.
It wasn’t the children, little Kit and Michael. Although she knew it would be difficult for them, she knew that they would eventually come to appreciate the calm atmosphere both parents could provide when they were free from the stress of arguing with each other.
So if it wasn’t the children, what was it?
Karen Soh was worried about the business she had started with her husband, Michael, nearly ten years earlier when they were first married.
It started off as a convenience store on the corner of Wilshire Boulevard and Sunset in a bustling part of Korea town in Los Angeles. They sold unique imported goodies from Korea as well as a few choice American snacks.
It wasn’t long before their business took off. Both Karen and Steven worked long hours to help the business grow and provide for their growing family.
A framed picture behind the counter showed a pregnant Karen holding hands with her daughter, Kit. On weekends the kids would help out by sweeping the floor and tidying up the shelves.
The business and the family seemed inextricable. Karen was worried. How could she ask for a divorce without losing everything?
In the end, Karen knew she had to do what was right for her family. In this article, we’re going to look at a few things she learned along the way that can help make the process easier for families who are questioning how a family business divorce can operate.
The first thing Karen wished she would have known ahead of time is how many marriages fail.
In the United States, we have seen an interesting trend in divorce rates over the last twenty years. In the year 2000, there were more than eight divorces for every one hundred thousand people. Over time, this number began to shrink.
In the year 2020, there was an average of five divorces for every one hundred thousand people in the country.
While it is becoming less common, it is still likely that any given marriage could end in divorce. That is why many lawyers recommend creating a written agreement about how to divide up property in the event of a divorce. Click here for more information on these statistics.
It can be hard to bring up the topic of divorce, especially when a relationship is just starting out. But many experts recommend doing it earlier rather than later.
This is because a common and fair agreement can easily be reached before a relationship becomes mired in conflict. If it is written and signed by both parties, it can be difficult or nearly impossible to contest when and if the time comes to make a split.
Perhaps you find yourself in the same situation Karen was in. You already have a family business and you’re looking for a divorce, but you do not have an existing agreement in place.
Emotions are sure to be running high as you begin the divorce process. One way to help bring things to a swift and fair resolution could be through the use of a professional mediator. This is a disinterested third party who can listen to each side and suggest solutions that neither party was able to see on their own.
A mediator is often a lawyer or other trained professional with a working knowledge of the relevant law. Click the link: https://en.wikipedia.org/wiki/Mediation#Uses for more information about this profession.
Make the Split
When litigating a divorce, a family business is considered an asset.
There are several different ways to break up a company.
Some couples might decide to split their financial share in the company and leave the day-to-day to one partner or the other.
Others might decide to split a controlling interest. There may be other family members involved, such as adult children, sisters, brothers, nieces, nephews, aunts, uncles, or parents. Each of these stakeholders may be consulted in the final agreement.
A partner might choose to give up their shares in exchange for a buyout. This is when one partner gives over cash or other commodities in exchange for the company stock.
If both partners decide that they want to remain in the business, a mediator can help them create a new agreement to lay out how they will be able to do so peacefully and fairly for everyone involved.
Karen eventually found the strength to ask for a divorce from her husband. With the help of a talented and compassionate legal team, they were able to come to an agreement that suited every party involved.
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