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What Are Your Options for Dividing Your Business in Your Divorce?


As a business owner, you may cringe at the thought of dividing your business in your divorce. Yet, whether your spouse helped you run it, held a minor interest in it, or supported you as you grew it, they will likely receive a share in it as part of their settlement. The manner that they receive their share may depend on your working relationship, as well as the assets you have on hand. Most divorcing business owners, however, divide their business in one of three ways.

Buying out your spouse’s interest in your business

When many business owners get divorced, they choose to buy out their spouse’s interest in their business. You may find this prospect enticing since it will allow you to retain complete control of your business after your divorce. The buyout process, though, can be tricky, since you must determine a fair value for your business. To reach this figure, you will need to work with a valuation professional. You may also need to consider the tax consequences of the buyout, especially if you plan on selling your business in the future. Moreover, you will need to make sure you have sufficient funds to purchase your spouse’s interest in your business. If you do not, you may need to give your spouse marital property of equal value in exchange for retaining full ownership.

Co-owning your business with your spouse

Few people jump at the chance to co-own their business with their former spouse. Yet, it may be a feasible option for you, depending on your relationship with your spouse, as well as their role in your business. Remaining co-owners will not make sense if your divorce is acrimonious. But it may be possible if your split is amicable, and you two remained effective business partners while dealing with your marital strife. If your spouse’s interest in your business is minor, it may also make sense to have them retain it, especially if you cannot afford to buy them out.

Selling your business

You will likely have a difficult time letting go of the business you worked hard to build. Yet, it may be your only option if you cannot afford to buy out your spouse’s share, if you cannot agree on a fair value or if two are unwilling and unable to co-own it. Keep in mind, though, that selling your business comes with its own challenges. For one, the sale of your business is contingent on whether a potential buyer exists. Furthermore, it is contingent on economic factors, like the market conditions and your business’ profitability.

When dividing your business in your divorce, you will want to make sure you do so in the manner most appropriate for your circumstances. An attorney can help you understand the options that are feasible in your situation.