Going through a divorce is messy enough, but what happens if you and your spouse jointly own a family business? Not only are you facing important decisions about how you will be splitting up your personal assets—you’ll also be tasked with dividing up or selling off your shared business. No matter what decision you and your spouse ultimately make, it’s important to take some time to fully understand your options so that you can make an informed and confident choice. While you and your divorce attorney will discuss every detail of your divorce, including what to do about your business, it’s worth taking some time right now to go over some potential actions you could take.
First Things First
Before you can begin negotiations about your business, you will need a neutral third-party to formally appraise the business. It’s important to have an accurate picture of what the business is worth, and from there you can start thinking about your options. You should take some time to visualize the future you want after your divorce is finalized—does your business play a role? Are you actively running the business, or do you think you and your ex are on friendly enough terms that you could continue to run it together? Or, perhaps you feel the time has come for you to forge a new path, so you may consider letting it go altogether. Take some time to set some mindful goals, and discuss these with your divorce lawyer.
When One Spouse Wishes to Keep the Business
For many divorcing couples who jointly owned a business, a common decision is for one spouse to assume full responsibility for the businesses. In order for this to happen, the spouse who wishes to keep the businesses typically buys out their ex’s interest based on the value given by the independent appraisal. As an added bonus, the direct purchase of shares in the event of a divorce is not considered a taxable event. If the spouse who is taking over the business does not have sufficient funds to fully buy out their ex’s interest, there are ways to design a settlement note that will be paid off over time. If you think this option may be best for you and your spouse, contact your divorce attorney to learn more.
Still on Friendly Terms? You Could Still Run Your Business Together
While it is certainly simpler in many ways to continue to jointly run your business like you used to, this option only works if you and your ex can still be civil and professional around each other. Even if you think that you can work it out and remain friendly, think carefully about what this truly means—can you truly remain objective and collaborative with your former spouse? If you have even the tiniest bit of hesitation, you should probably explore another option.
Walking Away From Your Business
For several divorcing couples, ending their marriage offers the opportunity to start a new chapter. This may feel like a natural time to sell the family business and begin a new independent endeavor. Of course, selling your business will take some time, and it may even prolong your divorce. However, once the sale is complete, you will be able to forge a new path and explore what your new future holds. No matter which option you choose, it’s helpful to discuss the pros and cons of each choice with your divorce attorney so that you can make your decision with confidence.
Want to know more about the divorce process in the West Chester area? Reach out to the dedicated divorce and family law attorneys at Garretson & Holcomb, LLC today by calling (513) 863-6600.