Your family business is probably a primary source of support and pride. Everything with it may be going just fine. That is until it becomes evident that a divorce is imminent.
Couples who own a joint business must determine what will happen to it if they decide to divorce. The business is treated as an asset. If there’s a prenuptial agreement regarding the company, that will be followed as long as it’s a valid agreement. If not, you must work with your ex to determine the company’s fate.
One person may buy the other person’s share of the company. This can be done in cash, or it might utilize a transfer of other assets. A business valuation is critical if this happens so both parties can ensure the appropriate buyout amount. Be sure to include the business’s intellectual property in the buyout, so the person keeping the company is the one who owns that property.
Joint ownership of the business is only possible if you and your ex can continue working together professionally. Setting the rules for responsibilities, pay, and expenses must happen as quickly as possible. It’s a good idea to have the terms for conflict resolution spelled out clearly in the partnership agreement.
Sell or close
If neither party feels like they can run the company alone and there’s no chance of running it together, it may need to be sold or closed. The profit from the sale of the business must be covered in the property division settlement. If the business is closed and there are debts, those will have to be covered to be paid.
Regardless of what happens with the business, you should consider the financial impact. This includes the tax implications of each option. These points might help you make a decision about this aspect of property division that’s in your best interests.
Ensure that you have the agreements about the business between you and your ex written out so either party can refer to those terms if necessary. Working with someone familiar with divorces involving family businesses can help you to ensure everything is covered. They may be able to give you ideas for creative solutions to issues that come up as you’re determining the company’s fate.