What happens when the financial issues involved in a divorce are not just personal? When either spouse is an owner in a small business, there are important aspects that will be addressed. Learn what will likely happen in varying small business ownership situations and the options you have moving forward.
Small Business Owners and Divorce
Joint owners of a business typically share the debt jointly-regardless of how much one is involved in the day-to-day business versus the other. The best way to avoid a long drawn-out legal battle during divorce is to address the scenarios in a prenuptial agreement, shareholder agreement or buy-sell agreement. If that didn’t happen, however, and you are now facing divorce, here are your options:
- Co-ownership: Some couples, who maintain an amicable and trusting relationship even after their divorce, opt to continue operating the business together. This strategy may work in certain situations, but is understandably challenging and typically not the path taken.
- Sell the business: Selling the business is a means of obtaining financial separation from an ex-spouse as well as generating funds that may be invested elsewhere. However, the sale of a company can be a quite lengthy and cumbersome process.
- Have one spouse buy out the other. If one spouse has sufficient liquid assets, they can purchase the interest of the other spouse. They may also offset the selling spouse’s portion of the business with other assets such as the equity in a home, an IRA or 401K, etc.
Note: If you opt for either of the last two options, you will need to determine the value of your business and each spouse’s ownership percentage. This is typically accomplished by hiring a professional business appraiser.
Talk to your divorce attorney and ensure you are taking the right steps to address the subject of your small business as soon as possible. In addition to the stress it can add to your life, these type of legal battles can negatively impact your business’s health as well.
Board Certified Marital and Family Law Attorney Charles D. Jamieson understands that divorce is an extremely sensitive and important issue. Thanks to extensive experience and a focus on open communication, Attorney Jamieson adeptly addresses the complex issues surrounding divorce while delivering excellent personal service. To discuss your small business as it related to your divorce, please contact The Law Firm of Charles D. Jamieson, P.A. online (hotlink) or call 561-478-0312.