Divorces upset a lot of areas of a person’s life. From where the children will live and visitation rights, to how retirement funds will divide, there is a lot to consider. One area that does not get much as much attention is what happens to a business involved in a divorce.
There is a lot that goes into a divorce. Your business is but one area that will be impacted by a divorce, but what can happen to it? There are three primary outcomes for a company in a divorce, and they are as follows:
Buyout
If one spouse wants to continue owning the business while the other does not, a buyout may be the best solution. After determining the company’s value, the spouse that wants to continue owning the company pays the other spouse half the value (or another agreed-upon amount) of the business, and the paid spouse will sign away their rights to the business.
Co-ownership
If both spouses want to continue owning the business, they certainly may do so. The involvement each spouse has in the business may change, however. A spouse may choose to have no part of the business, other than to continue collecting their share of the profits while the other spouse runs the company independently.
Selling the business
If both spouses cannot agree to either of the first two options or neither spouse wants to own the company, they may decide to sell the business and splitting the profits. The spouses may split the income in half to go to each spouse, or they may agree on another amount based on the amount of contribution each spouse put into the business.
Consider your options
Before pursuing a choice for your business, consider your goals and which of these options best suit your needs. Every choice for your business comes with its pros and cons, so talk with an experienced family law attorney to help determine which choice is best for you.
