As a family business owner, you and your spouse may also be business partners. The two of you may jointly own the business and run it together. For instance, perhaps your spouse is in charge of making products, while you do the marketing and get those products in stores.
While you’re married, this arrangement can work very well and be quite lucrative. But what happens if the two of you decide to get divorced? You will have to split up your marital assets, which are the things the two of you have acquired together during the marriage. This could mean dividing investments, bank accounts, art collections, family finances, household goods and even the value of the business.
If you started the business while you were together, that makes it a marital asset. Does this mean that you have to sell it so that you and your spouse can add the money from that sale to your marital estate for the purposes of property division?
Alternative options
It is common for business owners in this situation to sell their business, with the reasoning being that dividing the earnings is fairly straightforward via this approach. But don’t assume that this is the only option you have.
For instance, you could find another business partner or an investor – or you could take out a business loan – and you could purchase your spouse’s share of the business. This way, you get to keep running the company after the divorce. You may even exchange other marital assets – retirement accounts, the family home, etc. – to acquire this share of the business. Conversely, your spouse could buy out your share if that opportunity is appealing to you.
Or, maybe you and your partner want to end your romantic relationship, but that doesn’t mean you want to stop working together. You don’t have to sell the business or change anything, as the two of you can still be co-owners after divorce. It may just be wise to create a partnership agreement since the nature of your relationship is changing and you both need to safeguard your interests in new ways.
Exploring your options
The best option for a family business during divorce is going to depend on the unique factors of a specific relationship and the company itself. What works for other business owners may not work for you and your spouse. As such, it’s important to look into all of the options that you have and to carefully consider the legal steps that you’ll need to take during the divorce process. Being as proactive as you can in this regard can help you to make truly informed decisions.