It isn’t unprecedented for Georgia couples to be partners in both business and in life. However, if their marriage comes to an end, there is a chance that their business relationship will come to an end as well. Of course, it isn’t always feasible to dissolve a business relationship within a matter of weeks or months. In some cases, this is because there isn’t adequate liquidity in the company for one person to get bought out.
It is also possible that the spouse who is going to be bought out wants to continue receiving a share of the organization’s profits. The sale of a business can often be delayed up to five years after the marriage ends while still being considered related to the divorce for tax purposes. In the meantime, the person who will be bought out will typically retain limited voting rights or the ability to veto decisions the other spouse might make.
During the period before a buyout occurs, the person who is leaving the company should make sure that he or she is protected from lawsuits related to the business itself. It is also important to take time to have the company appraised to determine how much a buyout should be worth. Finally, it is a good idea to review tax documents to ensure that a person isn’t paying taxes on phantom income.
A divorce attorney may be able to help a person who is going through the process. Legal counsel might explain the options available to either sell a business or allow one person to be bought out.