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Is it possible to divide a business in divorce?

On Behalf of | Feb 8, 2022 | Family Law & Divorce

While a couple might agree that divorce is the best course of action for both futures, they will still face numerous challenging negotiations through the process. From the division of assets and debts to the determination of support and parenting time, the divorcing couple must work together to reach an acceptable resolution. Unfortunately, large, lucrative assets often present additional layers of complexity.

It is not uncommon for a couple to work together to build a new business or grow an existing company during their marriage. When divorce becomes a reality, however, it is necessary to assign a value to the organization and determine how it will be divided. Generally, there are several methods a divorcing couple can follow to accomplish this split, including:

  • Sell the business and divide the profits: A divorcing couple often gravitates first toward this solution. Many couples choose to simply make a clean break and sell the business to split the profits. With the profits in hand and no ties to the past, each partner is now free to explore his or her independent business ideas.
  • One partner buys the other partner’s stake in the business: It is not uncommon for one partner to invest more time or effort into the organization. Similarly, one partner might simply enjoy the business more than the other. No matter the specific situation, one spouse might choose to buy the other spouse’s stake in the organization and continue to run it himself or herself.
  • The couple divorces but continues to run the business together: This solution could be rarer than the others, but it works when the conditions are just right. If the couple splits with no animosity or the business runs with a natural division of responsibility, it is possible for the divorced couple to continue to run the organization together, but separately. Additionally, the couple might elect to do this for a set period of time only to sell the business when certain milestones are met.

Every divorce is unique. Likewise, every business is unique. Divorcing couples might find a challenge in reaching an ideal split through the property division process. With these solutions in mind, however, it could give the business owners a starting point from which to begin their negotiations.