Ways to Handle Divorce in a Family Business
Many married people have businesses, that means many divorces include separating companies.
Divorces are already challenging enough, and hard decisions need to be made about child custody, child support, and the division of property. However, if you own a business with your spouse, the division of a family business can bring an unexpected complexity to an already stressful event. Learn the different ways a family business may be divided or handled within a divorce.
Continue to Co-Own Business
While you are going through a divorce, you may not want to leave the family business for emotional or financial reasons. If you think that it is at all possible for you and your soon-to-be ex-spouse to work together cooperatively and continue to co-own the family business, this may be the best option for you.
While you both get to keep your own respective portions of the business, you also will not need to have an actual valuation done for divorce purposes, which can be both expensive and time-consuming. If you believe you can have an amicable business relationship, then this may be a good option for you. You would simply have new legal documents drawn up to create a partnership, just as any other business would have and continue with your business.
Buy-Out of One Spouse by the Other Spouse
If you do not think you will be able to co-own the family business with your spouse following a divorce, you have the option to either buy out your spouse, or your spouse could buy you out. In this scenario, the family business is simply treated like any other asset, and a full accounting and valuation will need to be done. After all marital assets are calculated, a determination will be made regarding how much one spouse should give to the other to have an equitable distribution of assets. If one spouse is unable to pay the other one out completely, creative arrangements can be made by taking the finances out of the marital home or even establishing a payment plan.
Sell the Family Business
In another scenario, if two spouses are unable to work together in the family business following a divorce and there is not enough money for one spouse to buy out the other spouse, or if they just want to dissolve the business completely, the business may be sold, and the assets distributed equitably. An appraiser will be needed to complete a valuation of the family business and when the business sells, the assets will be divided between both spouses.
Contact a Divorce Attorney Today
If you are considering a divorce and own a family business with your spouse, you have additional considerations regarding the equitable division of your marital property. Make sure your legal and financial rights are protected by contacting an experienced family law attorney at the Law Offices of Hollie A. Lemkin at (949) 734-7300 or online today, to help ensure that your legal rights are protected.