Dividing a business during the divorce process can be tricky and complicated. Because of that, it is important for divorcing couples facing property division and the prospect of dividing their family-run business to be familiar with the options available for dividing the business. There are different ways to divide a family-run business during divorce.
Keep the business and continue to operate together
If the divorcing couple decides to keep the business and to continue to run it together, this can be one of the most challenging options for the divorcing couple to choose. It requires the divorcing couple to be able to continue to work together as business partners and to clearly define their roles moving forward.
One spouse keeps the business
If one spouse wants to keep the business, they will need to buy out the other spouse’s interest in it. This will require the divorcing spouses to obtain a valuation of the business. If the spouse seeking to buy out the other spouse’s interest in the business does not have the capital to do so, a structure settlement note can be established to facilitate buy-out payments over time.
Sell the business and divide the proceeds
The divorcing spouses may decide to sell the business and divide the proceeds of the sale. Divorcing spouses who settle upon selling the business and sharing the proceeds should be prepared that this can delay the divorce while they wait on the sale of the business.
Dividing a family business can be emotional for both spouses and also have a significant impact on both of their finances. For that reason, they should be familiar with the different ways to divide a family business so they can approach it as informed as possible.