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How do you navigate a spouse selling a company before divorce?

| Jul 15, 2021 | Divorce, Property Division

You started a business after marrying your current spouse. With the two of you divorcing, do you or your soon-to-be-former-spouse have the right to sell the company right now?

Chron describes scenarios and options for handling a spouse selling a business during divorce. Both marital partners must understand how to safeguard their company or contributions to the company while dissolving a marriage.

Ownership rights

If one spouse has ownership rights to the company and the other does not, the spouse with ownership may sell the company before finalizing the divorce. Even then, spouses should count on a judge labeling the business as marital property. That means the spouse who sells the business must offer the non-ownership spouse compensation as part of the divorce. If both spouses have equal claims to the company, neither may put the business on the market without the other’s permission.

Company valuation

Spouses without ownership who still qualify for a portion of the company should have a professional perform a business valuation. That way, both marital partners know the business’s worth. Some methods that business appraisers use to gauge value include analyzing the market, income and assets.

Prevention methods

The spouse with ownership rights should know her or his spouse may seek a restraining order that blocks attempts to sell the business. This works if the non-ownership spouse proves his or her portion of the business faces reduction or damage if the transaction goes through. The restraining order blocks parties from transferring, jeopardizing or selling the business until after the divorce.

Divorcing couples must tread carefully when either spouse owns a business. A lack of knowledge or hasty decision could spell disaster in the court.

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