It’s fairly commonplace for individuals to have their own business nowadays. While some people run these businesses without their spouse’s support, others work hand-in-hand with their husband or wife at their family-run company.
Asset division is a key component to divorce negotiations. There are a few different options for dividing up a family business as you look to reach a settlement agreement with your ex.
What are your options for dividing your family business?
Divorcing spouses generally make one of three different choices when splitting the family business:
- Both spouses decide it’s best to put their company up for sale
- The spouses both decide to continue running their company as business partners
- One spouse offers to purchase the other’s ownership share in the business
In the case of the third option above, it’s not uncommon for the spouse who plans to retain ownership of the business to offer an equally-valued possession (such as the marital home) instead of hard cold cash when buying out their husband or wife’s share of the company.
A business valuation is key to making good decisions
No matter which option you pursue, you’ll want to have a business valuation performed. This accounts for both tangible (i.e., furniture and an office building) and intangible (i.e., brand recognition and community trust) assets.
Sorting out what to do with the family business can be hard if both parties are emotionally attached. Understanding the financial implications of making certain choices can be a bit challenging to do in situations like this. You should take time to learn more about the pros and cons of making certain choices. This will hopefully bring some clarity as you look to make decisions for the future.