Divorce involves the separation and negotiation of many aspects of life. If a couple runs a family business, the decision must be made as to whether they will remain business partners after their divorce. If this is not desired or possible, there are measures that can be taken to avoid dividing the business during a high-asset divorce in Georgia.
One of the most straightforward methods of asset division involves giving one spouse other marital assets in exchange for his or her share of the business. This could include property, stock, retirement accounts, cash or other assets that have financial value.
Another option is utilizing a Property Settlement Note. Property Settlement notes are a long-term payout one spouse makes to the other for several years following the divorce. The payout amount includes interest and is determined during the divorce proceeding.
Implementing an Employee Stock Ownership Plan (ESOP) allows individuals to sell their business shares to other employees when they leave. Though ESOPs can be effective and help businesses further their success, they typically need to be established before a divorce starts.
The goal of an ESOP is to provide employees partial ownership in the business through the sale of a minority interest. ESOPs are often implemented by setting up trust funds in which the business will place tax-deductible funds. That money is then used to purchase part of the interests for each employee, usually based upon his or her individual annual earnings.
ESOPs do not require employees to make any financial sacrifices, and individuals can sell their interests when they leave or retire from the company.
Whether your business already has an ESOP in place or you think a Property Settlement Note would be best for you, it is important to work with professionals who can help implement your plan effectively.
Source: Huffington Post, “How To Divorce-Proof Your Business: The ESOP or Property Settlement,” Jeffrey A. Landers, 13 April 2011