When business owners get divorced, it is a major change in their personal lives, but it can also have a significant impact on their professional lives, especially if they co-own a business.
The key issue is that jointly owned assets, like a business, must go through marital property division. So, what legal options are available if both spouses have a claim to the business?
Continuing to work together
For couples who are on relatively good terms–such as during an amicable divorce–it may be possible to continue working together professionally. They can remain co-owners of the business, even if their marriage ends. The main question is whether they can redefine their relationship in a way that allows them to collaborate effectively as business partners. For some couples, it’s easy. For others, it would never work.
One person takes over
Another option is for one spouse to buy out the other’s share and take over the business as the sole owner. This can help simplify things post-divorce. However, the biggest hurdle is usually financial. Depending on the business’s value, buying out a 50% ownership stake could be a significant expense.
Both people sell the business
If no other solution works, the couple may decide to sell the business entirely. For example, if the business is valued at $1 million, they could sell it to a third party and split the proceeds. This allows both people to move forward, possibly to start new ventures individually, using their $500,000.
Divorce involving a jointly owned business can be complex. It is essential for business owners to understand all of their legal options before deciding how to proceed.