Family businesses are very common in the United States. In some cases, spouses will start a business jointly. They may employ other family members. Even many major corporations today started with a single family decades before.
This can create complications when a couple gets divorced, if they are joint business owners. That company is a marital asset, and they both own it, so how do they address it during property division?
1. They continue working together
First of all, it is not necessary for them to change anything. Even if they get divorced, they could remain business partners. The couple just has to determine if they are on good enough terms to keep working together professionally, which is not the case for all divorces.
2. One person takes over
A very common solution is for one spouse to exit the business and the other to take over running it as the new sole owner. It is necessary for that person to buy out their spouse’s share in the company. They may do this by getting business loans or raising capital in another fashion, paying their spouse the financial value of half of the business. They may also consider surrendering different marital assets, like an investment portfolio or a retirement account.
3. The couple sells the business
If it is financially impossible to buy half of the business, couples will sometimes decide to sell the company. This turns their tangible assets, like commercial real estate, into financial assets. They can then divide the money they receive during the property division. This is easier from a financial perspective, but the downside is that both people may be disappointed to lose control of the business that they built.
If you and your spouse are business owners going through a divorce, these are just three options to consider. No matter which one works for you, be sure you know what legal steps to take.
