A divorce calls for hard negotiation or litigation over child support and alimony, visitation and custody rights, and asset division. Settling these matters can be a considerable challenge for any divorcing couple, but they have another challenge on their hands for couples who own a business.
While property and debt division can prompt many questions, business owners may be wondering how the divorce will affect their business. By identifying the three common outcomes of a company after asset division, a spouse can better create a plan that suits their needs. The three typical results of asset separation for a business are:
When both spouses are committed to keeping their share of the company, they may continue to do so. While ownership may not change because of divorce, the business practice of each spouse might. When both spouses may have had a very hands-on approach in the past, one spouse may pull back on responsibilities and assume a mostly passive role in the business.
If one spouse is willing to part with the company’s share, they may sell their share to their soon-to-be ex-spouse. Before a transaction takes place, each spouse should seek an accurate company valuation before negotiations begin. Additionally, the value of the selling-share of the company may become an asset in the rest of the property division negotiations. For example, a spouse may barter their share for the company for ownership of the family home.
If neither spouse wants to keep their share of the company or cannot agree over purchasing the other’s share, they may opt to sell the business entirely. Like a buyout, the spouses will need to ensure they get an accurate company valuation to ensure they are getting a fair value for sale.
Let an attorney help you plan
When looking for a divorce attorney to help protect your best interests as a business owner, choose someone who can also manage the unique challenges of business ownership. With their guidance, you can protect your best interests throughout your divorce.