Dividing a business during divorce can be difficult. It is important for divorcing couples who share a family business to prepare for the process of dividing the business and are familiar with the different options available for dividing the business as part of the property division process during their divorce.
Different options for dividing a business during divorce include:
- Both spouses keep the family business – one option is for both spouses to keep the family business and to continue to operate it together. This option can be challenging, if not impossible, if the divorcing couple cannot continue to work together. It requires them to decide on their roles in the business moving forward and to be able to cooperate and maintain civility to work.
- One spouse keeps the family business – another option is for one of the spouses to buy out the other spouse’s interest in the family business. If the spouse wishing to keep the business, and buy out the other’s interest, lacks the liquidity to do so, a settlement agreement can be developed for them to pay for the other spouse’s interest over time.
- The spouses sell the business and split the proceeds – a third option is for the divorcing couple to sell the business and divide the proceeds of the business as part of the property division process. This option can delay the divorce, however, while the divorcing couple awaits the sale of the business.
Divorce, property division and dividing a family business that the couple built together during a divorce can all be emotional and challenging topics. As a result, divorcing couples should be prepared for the property division process and have an idea of how they would like to handle the business during it.