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Dividing a family business during divorce
For divorcing couples that own a family business, there may be additional complexities associated with property division during their divorce. As a result, it is helpful for divorcing small business owners to be familiar with the different ways a business may be divided during the divorce process.
There are different options for how a business can be divided during divorce. One option is for one of the divorcing spouses to keep the business. This is typically done when one spouse buys out the other spouse’s interest in the business based on the appraised value of the business. In circumstances when the spouse seeking to buy the other out does not have adequate liquid assets to buy out the other spouse, it may be possible to structure a settlement note for the buy out to be made according to the terms of the note.
Another option is for the spouses to sell the business and to split the proceeds of the sale of the business. This process can take more time while the couple waits for the sale of the business which could extend the amount of time the divorce process takes. Finally, another approach is for both spouses to keep their interests in the business but the divorcing couple must decide if they will be able to work together or how they want to structure their roles moving forward.
Dividing a business during divorce can go more smoothly if the divorcing couple understands the different options to address dividing a business during divorce. Different approaches are available for the different situations couples find themselves related to their family business during the divorce process.