Ohio business owners who get a divorce may face a number of complicated issues related to the business. Depending on the size of the business and how it is run, it can be difficult sometimes to separate business finances from personal finances. The Tax Cuts and Jobs Act of 2017 has potentially provided some additional guidance in this area because it has identified two different classifications of income. However, this is still a complex area, and business owners may want to work with a financial professional on these and other issues.
It is important to separate business and personal finances both for the process of dividing property and for determining child and spousal support. Some methods of determining business income and valuing the business may be more advantageous to the business owner than others. If the company is considered a marital asset, the business owner may need to buy out the spouse. If the owner lacks the liquidity to do this, another option is a promissory note. Both the business owner and the spouse should consider any tax effects of this process.
If the spouse is going to be paid off over time, the couple may want a life insurance policy in case the business owner dies prematurely. Another option is an irrevocable life insurance trust.
Another option could be for the business owner to sell the company and for the two to split the proceeds. Some couples who own a business together might even decide to continue running it after the divorce. An attorney may be able to assist with negotiations over property division, child custody and support. This can be a complex process whether or not one or both individuals are business owners. Real estate, retirement accounts and investments can also be challenging to divide in a divorce.