If you and your spouse are facing divorce, the family business will become a focal point during property division.
When the business or the business interest was acquired may effect whether it is designated a marital or non-marital property. It is important to understand the implications of the definition of marital property and options for distributing it. Getting information about different options is always important. Some options to consider are as follows:
Put the business on the market
In some ways, this may be the easiest solution since it would represent a complete break in your marital affairs. However, putting the business up for sale would depend on economic conditions at the time. A buyer may not appear for quite a while, and the two of you might have to work together longer than you anticipated. Keep in mind that if you decide to sell the business outright, you will need to hire an appraiser to perform a valuation in order to determine the appropriate price.
Perform a buyout
If you operate the business day in and day out and are more emotionally involved than your spouse, you may want to perform a buyout. This is a common solution whereby you purchase your co-owner’s interest. Once again, you will need a valuation to arrive at the proper price. If your spouse agrees to a buyout, you can pay in full or concede an asset similar in value in order to equalize asset division.
Remain as co-owners
If you and your spouse expect an amicable divorce, the third possible option is to keep the family business and continue as co-owners. You would save the expense of a valuation and you would each retain your interest in the company. Going forward as co-owners in spite of the divorce is not for everyone, but if it works for the two of you, this may be the best solution of all.
Often working with an expert in the field of business valuations is helpful. Our firm is experienced working with experts to assist our clients in being fully informed regarding all options.