You and your spouse started the family business when your relationship was solid, but now that you are divorcing, the source of your income could unravel along with your relationship.
Typically, spouses have three ways of dealing with a business in a divorce, according to the American Bar Association.
1. Offer a buyout
One spouse is often more attached to the business than the other. For example, it could be your professional practice, while your spouse works as office manager, in which case it makes sense for you to buy out your spouse. Or, owning a business may be your spouse’s dream, while you would feel just as satisfied to be an employee as an employer.
Regardless, the keys to the buyout will be the fair market value and the financial ability of the spouse to purchase the other’s interest. Exchanging business or marital assets for the interest or obtaining financing are common options.
2. Find a buyer
It may be easier to sell the business to a third party, depending on the market, the value of the company and other circumstances. Splitting the proceeds of the sale and going your separate ways could make property division negotiations much simpler. However, the two of you may have to continue working together while you wait for the right buyer to come along.
3. Become partners
You could each keep your interest in the company and continue as business partners, whether you still work together or only one of you runs the company. Although you were partners before, your new business relationship requires a new business partnership agreement. As you draft the new contract, try to set aside any emotional residue from your marriage and keep all your dealings purely professional.