Dividing assets during a divorce can be complex under regular circumstances, but when a family business is at stake the process is even more complicated. Family businesses are often considered marital property, which means both you and your ex share in the asset equally.
Dividing a family business in a way that is acceptable to everyone can be an uphill battle. Before you begin, an objective appraisal must be performed so you and your ex understand the exact worth of the business. From there, you will need to decide whether to keep or sell your family business.
Selling the business
If neither spouse wants to assume control and you are not interested in running it together, the best option is to sell your business. Once the sale is complete, you and your former partner will receive a fair share of the proceeds based on decisions made by the court. Ideally, the sale will transpire quickly and the business will garner the value determined during the appraisal. In some cases, the process can take longer while you search for an interested buyer.
Keeping the business
Should you determine that keeping the business is in your best interest, you must decide between two options:
- You or your ex keeps the family business – The person who retains control of the business must buy out the other owner according to the value determined by the appraisal. A structured settlement can also be created, which involves the owner making payments to the ex-spouse until their full share of the business has been remitted.
- You both keep the family business – When both spouses retain ownership of the business, it is often easiest from an operational standpoint. However, it can be difficult to manage a business in partnership with an ex-spouse, especially if your divorce has been rather contentious. Couples that have split amicably may find this to be a preferable option since it does not entail any changes in taxes or operation.