On behalf of Stange Law Firm, PC posted in property division on Tuesday, June 9, 2020.
If your family business constitutes one of the major marital assets you and your spouse own, dividing it fairly and equitably between you could prove one of the major challenges of your divorce.
Per Forbes, you generally have three choices as follows:
- Sell your business and divide the proceeds equitably between you
- One of you buy out the equitable share of the other
- Continue to jointly own and operate it after your divorce
1. Sale
Selling your business may be a good option if neither of you desires to continue owning and operating it. A business sale, however, generally takes a while. First you probably will need to engage the services of a professional business evaluator to help you determine not only your business’s value overall, but also the value of your respective ownership shares. (S)he also can help you determine an achievable selling price.
2. Buyout
If one of you wants to stay with the business but the other wants to leave, then the challenge becomes how the staying spouse will raise the money to buy out the leaving spouse’s interest. Several methods exist, including the following:
- Give the leaving spouse other marital property equal to his or her share of the business
- Attract a new partner or investment capital sufficient to pay the leaving spouse
- Secure a business loan to pay the leaving spouse, with interest, over a period of months or years
3. Continued joint ownership
It may surprise you to learn that many couples successfully own and operate their family business together after their divorce. However, if the two of you work well together and possess the ability to keep your respective professional lives and personal lives separated, continued post-divorce ownership and operation of your family business becomes a realistic option.
