A Brighter Future For Your Family

Should you buy out your spouse from the business during divorce?

On Behalf of | Sep 19, 2023 | Uncontested Divorce

Going through a divorce poses a variety of challenges, both emotional and financial. When you and your spouse own a business together, one challenge is deciding how to handle that business in the asset division process.

If you think you might want to buy out your spouse’s interest in the business to take it over yourself, there are some important details to think about.

How much is the business worth?

You need a professional business valuation before you can consider a buy-out. Your spouse’s interest in the business depends on how much the business is worth and what percentage of financial interest they hold.

What is your financial situation?

Can you financially afford to buy out your spouse’s share of the business? Remember that your financial situation changes after divorce because your living situation and expenses change and you become a single-income household. Consider what you can reasonably afford so that you do not overextend your financial commitments.

Can you manage the business?

Taking over full responsibility for the business changes the dynamic. Do you have the physical and emotional capacity for the demands of the role? Develop a plan for how you will manage the day-to-day needs of the business in addition to your personal needs and those of your children, if you have any.

Can you negotiate a settlement?

Sometimes, you can negotiate a settlement that keeps you from having to pay anything for the business directly. If you have other assets equal in value to your spouse’s share in the business, consider negotiating to keep the business in exchange for the other asset.

The average divorce in the U.S. costs between $15,000 and $20,000 according to Forbes. Coming to an agreement with your spouse about how to handle the business might save you significantly in cost and time.