Dividing the family business in divorce

A divorcing couple will need to thoroughly examine the assets and debts they’ve acquired over the course of the marriage. Depending on the types of assets that must be included, property division can quickly become a complicated process. Dividing a family business can be a difficult, emotionally charged negotiation.

While various factors can play a larger or smaller role in the division of property, there are generally three options that couples will consider when dividing a business and protecting its profitability.

  • Sell the business and split the profits: It is not uncommon for neither party to desire any future involvement with the business. In these situations, they will need to receive a proper valuation and then sell the business outright. Having washed their hands of the company, the divorcing couple can split the profits and move on toward developing independent future endeavors.
  • Buying out the other spouse: In some business partnerships, it is clear that the organization means more to one party than the other. As mentioned previously, after a business valuation, one spouse can buy out the other spouse and continue to own and operate the company.
  • Running the business as co-owners: While the marriage might have failed, the business partnership might still be successful. Many couples can ultimately reach an agreement on a division of responsibility that allows them to grow independently in their personal lives and cooperatively in their professional lives.

It is crucial to have these discussions in an open and honest atmosphere. From deciding which method of business valuation to follow to coming up with comprehensive operational documents, business divorce can be a challenging process. With the proper guidance, the division of assets and debts in your divorce can run smoothly.