Property division is difficult in most divorces. When a family-owned business is involved, it can be especially tricky.
Dividing a business in divorce can mean making some exacting calculations and some uncomfortable decisions.
Options for dividing a business during divorce
There are several options for dividing a family business during divorce including:
- One spouse keeps the business: This is the most common option for addressing a family business during divorce. Typically, the spouse who runs the business will buy out the other spouse’s interest in the business based on an appraised value of the business and that spouse keeps the business. A settlement note can be developed if the spouse wishing to keep the business does not have the capital to buy out the other spouse all at once.
- Both spouses sell the business: If the spouses agree to sell the business, they can sell it and then split the proceeds as part of their property division process. The process may be delayed by the amount of time it takes to sell the business.
- Both spouses keep the business: This option is only viable if the spouses can continue to work together which may be emotionally challenging and challenging in other ways as well. This option is less common for that reason.
It will also be important for the divorcing couple to accurately value the business whether they are deciding to sell it or decide that one of the spouses will buy out the other. Handling a family business can be a complex component of the property division process which is why spouses who also happen to be business owners should be familiar with the different options for dividing their business.