A divorce can be emotional for your entire family. It can also be a challenge if you and your spouse own a Rhode Island business together. However, for such couples, it may be easier to transfer an ownership interest in the business to the other spouse as part of the divorce settlement.
How can you transfer your interest to your spouse?
During a business divorce, transferring your ownership interest is a good way to allow your spouse the opportunity to continue running the business. It can be part of the divorce settlement and can also protect you from potential conflicts in the future. This can even help you avoid conflicts with future investors and buyers.
At the same time, you will want to avoid actually listing the transfer of business ownership on the divorce decree. You should not do this as you don’t want to have any third parties seeing the information related to your divorce. Any information that’s separate from that of the business itself should be kept completely separate and away from the eyes of third parties. Instead, you can do this on a separate document that only mentions matters related to the business itself. Using a transfer document can also be beneficial as it includes provisions not normally seen in settlement agreements.
When the divesting spouse makes claims against the business
Once the business is transferred to the other spouse and the divorce is finalized, the party who gets ownership interest won’t want to have to defend claims against the business by the party who divests. A release of claims protects the business against claims brought by the divesting spouse and ensures that party has no authority to take any actions against the company or make statements for it as they no longer hold a position in the business.
The reason why transfer of ownership in business divorce occurs is to protect the business and the spouse receiving the transfer. Potential issues can arise that neither party may have foreseen, which makes taking the right steps to ensure that the transfer takes place properly so important. It lets the business continue to operate optimally and helps to avoid conflicts once the divorce is final.