On behalf of Stange Law Firm, PC posted in Divorce on Thursday, February 6, 2020.
Divorce presents many financial concerns, but it can be especially worrying for business owners. Individuals invest more than time and money in entrepreneurial endeavors. They also put in a generous amount of blood, sweat and tears to bring their aspirations to life.
With your marriage ending, your business may feel like your center of gravity right now. The worry that you may lose control of it in the divorce may be keeping you up at night. Here is a breakdown of the most common options for dividing business assets.
The method appropriate for you will depend on a number of factors, including how much of your business qualifies as marital property, how involved your spouse is in your endeavor and what precautions you took ahead of time.
Options for asset division
- Keep the business and buy out your spouse. Unless a prenuptial agreement or other legal contract exists that locks your spouse out of the business, at least some portion of your business is going to qualify as marital property. That being said, the cleanest way to divide property and keep your business to yourself is to buy out your spouse’s interest.
- Sell the business. If you there is no way to buy out your spouse-and working with them as a business partner is not a viable option, you may consider selling the business and splitting the proceeds. Obviously, this is not ideal for someone who wants to continue in the business. But if negotiations do not go as you hope, this is a possible plan B.
- Share the business and the income. Peaceful co-ownership is rare but works for some spouses who part amicably. It allows both spouses to benefit from the business in an ongoing capacity. However, this option might include emotional challenges along the way.
Spouses with complex assets, like businesses, may have more to lose in a divorce. However, a legal professional can help the individuals involved make the right choices for their futures. On the bright side, business owners also possess the tools and means to launch a successful new beginning.