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The various elements of a business affected by divorce

Family businesses play a massive role in the U.S. economy, and millions of people across the country have a stake in the opening, operation and closing of these businesses. This includes employees, partners and clients that can span generations.

However, at the root of these companies is the family. With this in mind, a lot can change when the "family" part of a business changes. If you own or have a stake in a family business and get divorced, then you should be aware of how such an event can affect your company.

To illustrate the complications that confront family business in light of a divorce, we can look at one recent story involving the chief executive of a family business, his family and his divorce. 

According to reports, the man's family voted to fire him in light of accusations that he improperly spent millions of dollars from the business on a woman he was seeing outside of his marriage. Ultimately, the man divorced his wife, married the other woman and was fired. The man's three children -- who control 46.8 of the business -- are now fighting over who should run the business in his place.

This case is a reminder that divorce doesn't just affect the two spouses when there is a business involved. It also impacts:

  • Familial relationships, including siblings, parents and others who have a stake in the company
  • Business leadership structure and roles
  • The financial stability and future of the business, especially when it gets split 50/50 in the division of assets

Divorce severs personal relationships and divides property; it changes ownership and professional obligations. And unless you take steps to protect the business, its assets and the other owners and partners, a divorce could spell the demise of a family-owned enterprise.

If you own a business in California or plan to marry or divorce someone who owns a business, then you would be wise to discuss with an attorney your options for protecting yourself and the business. With legal guidance, you can better understand how divorce can affect the business and what steps you can take to minimize the potential fallout.

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