Transferring Business Assets during Divorce

A natural part of the divorce process is the division and transfer of marital assets. While some assets can be easily divided and transferred, others may quickly become complicated. This frequently occurs with assets related to a private business. 

Taking certain actions regarding property during this time may influence the future of a privately owned business. As a result, many divorcing spouses encounter complications when transferring business assets during divorce. While the division and transfer of these assets may be complex, there are some best practices that divorcing spouses can follow for guidance through the process.

Methods to Effectively Transfer Ownership Interest

While a divorce decree or settlement agreement may document the transfer of assets following a divorce, spouses may also want to use a stock transfer agreement to document the transfer of assets and ownership interest. A stock transfer agreement, also known as a share purchase agreement, can document the transfer of assets without including other non-financial or non-essential information outlined in a divorce decree. This can be beneficial for individuals who need to provide financial documents to institutions in the future for business purposes.

What Should You Include in a Transfer Agreement?

In a transfer agreement involving the transfer of ownership interest, it may be important for the receiving spouse to outline the transfer of intellectual property, rights, and interests in the company from the divesting spouse.

“Securing the transfer of intellectual property in a divorce involving a private business could be critical to ensuring the business’s ability to operate in the future,” said Attorney Ashley Pepitone of the Atlanta Divorce Law Group. “Making sure that the divesting spouse transfers the rights, titles, and ownership of trade secrets, trademarks, patents, and other intellectual property can help safeguard a business’s ability to both operate and remain profitable.”

Methods to Protect Your Business from Future Claims

In addition to securing the transfer of intellectual property in a transfer agreement, there are other measures that a recipient spouse can take to safeguard their business from future claims by the divesting spouse. Giving the divesting spouse enough time to review the information outlined in a transfer agreement and divorce decree can help ensure that they are not deprived of conditions necessary to make a decision.

Furthermore, there are several other measures that the recipient spouse may want to consider to protect their business. In some cases, requesting that the divesting spouse accept restrictive covenants and sign a confidentiality agreement may protect the future ability of the business to operate without intrusion. 

Restrictive covenants may hinder the divesting spouse’s ability to compete with the private business or interfere with company operations for a designated period of time. Similarly, a confidentiality agreement may also help proactively protect a business by prohibiting the divesting spouse from revealing confidential information, trade secrets, or other materials that may have commercial value.

Overall, the transferring of assets may quickly become a complicated and emotional process for individuals navigating the divorce process. However, following some best practices can help safeguarded a private business from future claims. Taking steps to include the transfer of all relevant intellectual property, effectively documenting the transfer of assets, and taking proactive protective measures can help ensure the continuance of the business.