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Tips for keeping a family business during divorce

Divorce can ruin a business if steps are not taken in advance to protect it. This is especially true when the co-founders of the business are the ones who are married. If you're thinking about starting a company with your spouse, even if you feel like you're never going to get divorced, it's wise to have a plan in place. Most people ignore this because they don't think they'll get divorced, but it can sink the company if it happens.

First off, some experts say its wise to make the agreement biased in favor of the business. Put in provisions that protect it even more than anyone's personal interests.

Next, set up buy and sell contracts in advance. One of the big issues is when one partner decides to leave and wants to sell of his or her ownership. Battles over how this should be done can take a long time, and an agreement that favors the seller may still harm the company. With the agreement in place in advance—and in favor of the company—you know what to expect.

As you do all of this, be sure you have an accurate valuation done on the company. Never assume you know what it's worth or let the other person decide. You both are going to be biased in this decision. A third party can give you a real-world valuation so that you know just what it's worth and what a fair split looks like.

Above all else, the key is to plan in advance; don't put this off until you're getting divorced and it's too late. Look into your legal options in Massachusetts and get that plan in place.

Source: Crain's Chicago Business, "Family business and divorce: a six-step survival guide," Meg McSherry Breslin, accessed April 01, 2016

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