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Divorce When You Co-Own a Business

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When business owners decide to get divorced, things can quickly become complicated. This is especially true when spouses are also co-owners of the business. In these cases, business assets must be divided in a way that is fair to both parties. Many different outcomes are possible in these situations, and we'll explore a few of them in our blog.

What Will Happen to Our Business?

During the divorce, the business might come up in the asset division process, especially if the couple co-owns the business or the business was formed during the couple’s marriage. The court will evaluate if the business is considered separate or communal property and subject to asset division. If the business is considered a marital asset, then the business will need to have a formal valuation done so the court can consider the overall value of the business and its assets in its process.

What Are the Outcomes of Asset Division?

Three main outcomes can happen when a couple's business undergoes the asset division process.

One Party Buys the Other Out

One common outcome in these situations is that one spouse buys the other out of the business. This can be a fair way to divide business assets, as long as both parties agree about the outcome. To "buy" the other party out, assets can be divided so the spouse who will not keep the business will be awarded assets with the same combined value of the business. If the couple has debt that needs to be divided in the division of assets process, the spouse who retains the business can also take on some of the debt to help with the division process.

The Business is Sold

The business may also be sold and the proceeds divided between the two parties. This is often the simplest solution, but it may not be possible if the business is not doing well or if the couple cannot agree on a sale price.

The Couple Continues to Co-Own the Business

In some cases, the couple may decide to continue co-owning the business even after the divorce. This can be more complex as it may require more communication and cooperation between the ex-spouses and can become difficult if communication is not open and clear between business partners. However, if the couple can communicate effectively and wishes to continue to work together following their divorce, this option can be beneficial, as they both retain the benefits of owning the business.

What Happens if We Can't Agree?

If you and your spouse cannot agree on what to do with the business, the court will make a decision for you through litigation. The court will consider many factors when making this decision, such as the business's value, each spouse's role in the business, and whether one spouse would be at a disadvantage if the business were sold.

Making decisions about what to do with your business during a divorce can be difficult, but it is important to remember that you have options. You and your spouse can work together in mediation to come to a fair solution for both of you, or the court can decide for you if you cannot agree.

We Do Family Law Differently

At Embry Family Law P.C., we do family law differently. Our experienced family law attorneys will help you set goals and then develop strategies to meet your goals. Together, we can help you exit your marriage with the best possible outcome.

Are you a business owner considering divorce? Request a consultation with one of our experienced divorce attorneys today by calling (619) 485-6476. We are waiting for your call!