How business ownership can complicate divorce




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Dividing your money, debts and property when you divorce can be stressful and confusing. And if you or your soon-to-be-ex-spouse is a business owner, the stakes of property division can be especially high. 

Potential options for handling a business

If you own a business together or separately, you and your ex will typically have a few options for what to do with it when you split. 

  1. Continue to share ownership
  2. Divide or sell the business
  3. Retain individual ownership

The option that is right for you will depend on what type of business. Is it incorporated or unincorporated? Is it a limited liability corporation (LLC)? Do you own it together?

Categorizing the business is also crucial. Is it separate property or a marital asset? Based on the answers to these questions, you can determine whether a company and its value or assets are subject to division in a divorce in the first place.

Further, having existing plans addressing the future of a business in a divorce will affect how and if you divide a business and its assets. These agreements can include a prenuptial or marital agreement or a business succession plan.

Your relationship with each other will also influence the outcome. For instance, if you are amicable and cooperative, you may be capable of continuing to run a business together. Otherwise, you may need to sever the ownership rights and duties of one or both of you.

Issues that can arise

A business is a complex asset. Unlike a bank account or personal property, you cannot simply divide it in half. Instead, you will likely need to:

  • Consult financial professionals to secure a fair business valuation.
  • Draw up complete and accurate financial disclosures.
  • Determine whether the business or its assets are marital or separate property.
  • Consider input from others with a stake in the company, whether that’s family members, partners or shareholders.
  • Negotiate settlement, buyout or partnership agreements.

These can be delicate and sophisticated processes, so having qualified professional support help you navigate them fairly and efficiently can be wise. 


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