As married business owners, you and your spouse have combined almost every aspect of your lives. You have worked together now for years, and you share the business evenly. Unlike your business, however, your marriage is not thriving.
While considering a divorce, you begin to wonder what will happen to the business. If you end the marriage, do you also need to close down the company?
Your 4 main options for dealing with a marital business
You have four basic options – the first of which is for you and your spouse to agree to sell the business to a third party. You lose your business and the income it generated, unless you can negotiate an employment contract. However, you gain a lump sum payment unless it is an installment sale, i.e. the buyer pays the purchase price in periodic payments over a period of time. Do not forget, there are likely to be taxes due on the sale and you will have to split the sales price with your spouse.
Second, if the business is not worth anything or if you cannot sell it, you may just have to close the door and walk away. Perhaps you will be able to sell any inventory or equipment and split the proceeds.
The third option is for either you or your spouse to buy the other person’s interest in the business. You may be able to facilitate this by giving them more of your marital assets in exchange for their stake in the business, or you may be able to borrow the funds necessary to buy your spouse’s interest.
The final option is to change nothing, professionally speaking. You can both stay on as owners and work together, even after the divorce. If you and your spouse are on fairly good terms, it may make the most financial sense to just continue working together.
Navigating a complex divorce takes skill
If you are involved in this type of complex divorce, you should explore, with a skilled family law attorney, all the legal options you have to protect your interests. There may be options that you haven’t even considered.