You have divorced and your business has been awarded to you through the divorce decree. What now? Most folks think the divorce decree is all that is necessary to deal with ownership transfer. The fact is there’s more paperwork necessary to properly transfer ownership.
Business in Divorce
A business, most of the time, is treated as an asset then awarded or divided by a court of law as a portion of the community estate. Typically, the award is just effective as to the couple divorcing. Imagine it like your car loan or mortgage. When a court of law awards your house to a spouse, there’s still documents to prepare (such as a deed) that transfers the title. Likewise with vehicles, when the divorce decree awards you an automobile, you still have to transfer title with your state. The same holds true with businesses. Just like those examples, there’s extra documents to transfer ownership and title.
What Documents Are Required?
The documents vary depending on the award that is made by the court and the kind of entity. For example, a corporation’s documents differ from an LLC. Instances of paperwork necessary may include things like minutes, purchase and sale agreements, unanimous consents, resignations, etc.
Why Is It Important?
Correct paperwork is crucial to make sure that ownership is transferred properly. For instance, a previous spouse leaving a business doesn’t want to find herself/himself liable for any debts down the line because the documents weren’t completed, or were incorrectly done. Similarly, owners want due diligence to run smoothly if a new partner or investor is thinking about coming into the business. Correct documents and paperwork also are necessary in the event of a workforce agency audit, IRS audit, or other governing body audit.
When a business is involved in a decree, you should seek legal assistance regarding necessary documents to implement the transfers in the decree. Doing it properly and in a timely manner minimizes risk and makes sure everything runs smoothly moving forward for everyone involved.
LACFLA (Los Angeles Collaborative Family Law Association) provides you an option of professionals who address all emotional, financial, and legal aspects of divorce, and other kinds of commercial and civil disputes. Contact us right away at (818) 933-4505.