Marriage uniquely blends family lineages, lives and finances. Many couples decide to own and operate their own business or businesses. What happens to the family business in the event of a divorce?
Planning a divorce can involve property division, child custody, alimony, pets, etc. Businesses owned by spouses represent a major investment of time, energy and resources. In the process of divorce, it is important to consider the family business as a part of asset division.
3 options for the family business
According to Forbes, there are three basic options for dealing with the family business in a divorce:
- Sell to a third party: Both partners can agree to sell the family business as a part of the divorce decree. For some couples, it is an option to liquidate and divide the proceeds from selling the business to a third party. This solution offers a finality that may be appropriate in a divorce.
- One partner sells their shares to the other: Sometimes one spouse is not interested in continuing to be a part of the business. However, their investment must be accounted for and compensated. When one owner is more involved with the success of the business, this option allows the other partner to sell their shares.
- Both continue to own the business: This option may not be viable for many couples. Continuing to own and run the business together requires compromise, patience and mutual respect. Some marriage partners are willing to continue to be business partners long after the marriage is over.
After investing years into a family-owned business, it is imperative to properly and considerately decide the business’ future.
When considering the family business in a divorce, it is advisable to learn more about all the legal options available to protect the investment.