This blog recently discussed some of the challenges around dividing a family business during divorce. It can be helpful to couples going through the challenges of dividing a family-owned business to take a little closer look at the different options available, and ways, to divide a business during divorce.
There are several different options divorcing couples may want to consider to divide their business. Divorcing couples should understand the differences between the options so they can decide which is best for them and their situation.
- One spouse keeps the business – one option is for one spouse to keep the business by buying out the other spouse’s interest in the business. If one spouse is not able to buy the other spouse out, they can structure a settlement that will be paid over time. The sale will be based on a valuation of the business.
- Both spouses keep the business – a second option is for both spouses to keep the business following the divorce. For this option to work, the divorcing couple will have to think about whether or not they can work together following the divorce and what the roles for each will be in the business following the divorce.
- Both spouses sell the business – a third option is for both spouses to sell the business and split the proceeds of the sale as part of their property division settlement agreement. This option may delay the couple’s divorce process while they wait for the sale of the business.
It is beneficial for divorcing couples who share a family business to be familiar with the different ways they can address dividing their business during the property division process. The property division process can quickly grow complex, especially when high-value assets such as a business owned by the couple needs to be valued and divided. Awareness of the different ways couples can address these concerns can help them prioritize and protect their interests.