Divorce is never easy, especially when a family-owned business is at the center of the dispute. While few Minnesota residents have family-owned businesses comparable to Harold Hamm, the oil-tycoon and CEO of Continental Resources discussed last week, and Rupert Murdoch, the Australian media mogul who recently filed for divorce from his third wife, readers can likely learn a thing or two from these entrepreneurial giants.
In both cases, the news has been abuzz with questions concerning the effect the divorces will have on their businesses. With Hamm, there does not appear to be a prenuptial agreement protecting his business assets. Furthermore, due to his wife's involvement in the building of the company and the duration of the marriage she will likely have a stake in his stock, leaving him vulnerable to losing control of the company.
In the case of Rupert Murdoch, it is still unclear if a prenuptial agreement exists or how control of News Corp will be affected if one does not exist. One key factor involved in dividing assets in a divorce are the property laws of the state in which the couple resides. In Minnesota, for example, the state has an equitable distribution law, which requires the courts to distribute assets fairly, not necessarily equally.
It is also important for those who start a business after marriage to know about post-nuptial agreements. A post-nuptial or a post-marital contract works just like a prenuptial, but rather than preparing it prior to marriage it is prepared after the fact. In the end, with so many factors at play, from state distribution laws to complex individual considerations, a prenup or post-nuptial marriage agreement may be the only way to ensure that a business is divided or continued according to the intent of the parties in the event of a divorce.
Source: Entrepreneur.com, "Why Rupert Murdoch's Divorce Is a Wakeup Call for Business Owners," Leah Ingram," June 17, 2013
