QUESTION
Do I have to sell my business if I'm closing it down and ex-wife wants to own/operate it?
Asked on Feb 16th, 2015 on Business Law - Minnesota
More details to this question:
I've operated a business for 15 years as a sole proprietor. I only own the business operations so land, building, equipment is not owned at all. It is a lease to own agreement. We operate and keep terms of lease and then we own 1/2 of everything after 20 years. My ex-wife of 5 years wants to own/operate business under an LLC. We are on amicable terms and I don't want her to pay for the business. She feels she can turn the business around and I hope she does. I just need to know if I can just close my business entity down and she can just operate under her LLC without purchasing anything because there isn't anything to purchase. I figured it's just switching everything over into her name and contact for basic stuff like phone line etc... that needs to really be done.
1 ANSWER
There are some issues here. First of all, there is something to purchase - the goodwill of the business. Although intangible, goodwill - that is the expectancy of future business based on prior operations, the business's name, the location, customer relationships which have been built up, etc. - is often the primary asset of a business. Transfer of this asset without consideration (for free) can have tax impact and could also violate a duty to your creditors. Second, and probably more important, what does your rent to own contract have to say about a new owner coming in and operating the business? Are you allowed to transfer the business? Will the same 20 year period apply? I can't answer these question without a lot more detailed information, and anyway I'm located in New York and not admitted in MN, but you may want to consult an attorney or accountant.
Answered on Feb 17th, 2015 at 1:29 PM