A common scenario when dividing a family-owned business in a divorce is for one spouse to transfer their ownership interest to the other spouse. Assuming that the other spouse has the funds to buyout the other’s interest, there are a number of issues to consider when transferring ownership to a spouse to protect a transferor from financial liability after the divorce is finalized:
- The transferor (the spouse transferring the interest) should obtain a release of claims from the business to protect themselves from future claims asserted by the business at the direction of the transferee (the ex-spouse receiving the interest in the business).
- Additionally, the transferor should secure indemnity from the business for any future claims made against the transferor by third party creditors or others. If, for example, the business is subject to a lawsuit after the business interest has transferred hands, the transferor will want to be exempt from legal liability.
Because there are many issues to consider when transferring the interest in a business in a divorce, it is important to work with an experienced Illinois business valuation attorney. With over a million family owned small businesses in the U.S. controlled by husbands and wives, ensuring that the rights, titles, and interests of every kind are transferred properly and that both parties are protected from future liability is crucial when dividing a small business in a divorce. Contact Ronald L Bell & Associates PC for more information at 847-495-6000.