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If you or your ex owns a business, you may be wondering how a business is divided in divorce. Dividing a business in a divorce is a complex matter and one that requires an experienced matrimonial attorney. When there is a business that is a marital asset, the following options are available:
- The business is sold
- The business is retained by one spouse
- The business is jointly owned after divorce
Selling the Business
If the business is sold, the couple splits the proceeds according to the terms of the property division they create in a settlement or which is created by the court.
Ownership by One Spouse
This is the most common scenario. Often there is one spouse who was most involved in the business and wishes to continue to own and run the business. The value of the business is calculated and included in the total pot of assets the couple owns. When the assets are divided the spouse who will not continue with the business is awarded other assets as his or her portion of the business’s value. It is also possible to create an ongoing payment process, based on future profits.
Joint Ownership
It is possible to continue to own and run a business together after a divorce, but it is difficult to do. Some couples can maintain a working relationship even though their personal relationship has ended. In general, it is problematic and it is advisable that some sort of tie-breaker decision-making process is created so that if you disagree about business decisions in the future the company will not be deadlocked.
Talk to DeTorres & DeGeorge about property settlement and division and valuation of businesses in a divorce.
