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Small businesses division during divorce

On Behalf of | Jan 9, 2021 | Family Law |

The financial implications of a divorce include the division of assets in the marital estate. Divorcing spouses who own businesses may especially feel the impact of property division. 

When going through the divorce process, many couples choose one of the three following ways to split their business assets. 

Sell the business

Selling the business is a great option for divorcing spouses who can no longer work professionally enough to run the business with their ex. An expert will assess and value the business. After the sale of the company, the exes will share the proceeds. 

Downsides to this option include the complications of selling a business quickly and difficulties trying to find an immediate buyer. 

Buy the business

If the ex-couple can come to an agreement, one of them can buy the other person’s share of the business so he or she can fully own it. This transaction can occur entirely in a lump sum or over a few installments. 

Depending on how much of the business the spouse decides to buy, he or she will become the one responsible for running the company. Whoever has a minority or none of the business shares might elect to take on a smaller, operational role if he or she stays involved with the corporation. 

Share the business

The most simple choice logistically is for both people to continue sharing their business. Depending on the dynamics of the relationship, exes who can still cooperate and communicate effectively can continue business operations without any interruption. Both individuals can continue their roles in the company as they did before filing for divorce. 

However, if the couples struggle to get along during the divorce proceedings and contest every issue on the table, should avoid remaining long-term business partners. 

Overall, married business owners going through a divorce may raise some challenges for the soon-to-be-exes, but with careful planning and strategic decisions, they can settle issues peacefully.