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The 3 main ways to handle the family business in a divorce

On Behalf of | Sep 26, 2022 | Business Division

You and your spouse once did everything together — including opening and developing your business.

Things have since changed, however, and you’ve grown apart from your spouse. You’ve already begun separating your lives — but you still have to figure out what to do with the business.

What are your options for the business?

Absent any kind of prenuptial agreement or terms laid out in your  partnership agreement with your spouse (if you have one), there are basically three ways to approach the business:

  1. You sell the business to a third party. This means that both you and your spouse agree to divest yourself of the family business as part of your divorce. By selling, you can liquidate the equity in your business, divide it and move on without encumbrances.
  2. One of you sells their share of the business to the other. If one of you is clearly more emotionally invested in the business, this might be the way to go. If you don’t have the cash to buy out your spouse’s share or assets to trade, you may be able to work out a payment plan as part of your settlement in the divorce.
  3. You both keep the business. This is usually only advisable if you and your spouse have managed to remain friends despite your marital issues. Some people have the ability to separate their business dealings from their personal ones, but most don’t. Make sure that you think long and hard before you go this route. It will leave you and your spouse tied together for the foreseeable future.

Ultimately, you may not be able to decide on a path until you know more about your options. You may also need to get the business valuated prior to making any firm decisions. Working with an experienced advocate can help you stay focused and keep your goals in mind.