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3 options for divorcing family business owners

On Behalf of | Dec 13, 2023 | Property Division

Business owners are sometimes married couples, often because it’s very convenient for them to start a business together. They already have a close relationship and many small businesses are owned by married couples who utilize a business as their main source of income.

This arrangement can make things complicated when these business owners decide to get divorced. The business may have grown to be worth a significant amount or it could be struggling. What are spouses supposed to do with it while they divide their marital assets? Considering three common options – in addition to more creative solutions – is generally a good place to get started.

Keep working together

First and foremost, business owners need to remember that they don’t have to change their professional relationship if they don’t want to. They can get divorced, set up a partnership agreement to redefine their relationship on professional terms, and then continue owning the company together.

Selling the business

Another relatively straightforward solution is to sell the company. It may be difficult to divide tangible assets, but selling it converts the business into a financial asset. The partners can then add the proceeds to the marital estate for division purposes.

Assuming one spouse’s share

Alternatively, one spouse may decide that they are going to leave the business and the one spouse may decide to remain. They may effectively “buy” their ex’s share. This is sometimes done with a business loan, with investors, with a new business partner or by trading other marital assets.

Each divorcing couple that co-owns a family business can benefit from seeking legal guidance before committing to any particular strategy, given the value of what is at stake.