As a business owner, you have put time, effort, energy and money into your company. If the court regards your business as marital property, however, you will face unique challenges during property division. Generally, there are three options available to business owners in a divorce: selling the business, buying out their spouse or continuing the business as co-owners.
Operating as co-owners is an option for some couples.
While it can be difficult to put your business first and continue business ownership alongside your ex, maintaining co-ownership of your company can work for some couples. As Forbes notes, this can be one of the most straightforward options from a financial standpoint, but you and your spouse need to carefully consider whether you will be able to work together after your divorce.
Buying out your spouse allows you to act as sole owner of your business.
If you want to continue operating your business but cannot share ownership with your ex, buying their share in the business could allow you to move forward with your business intact. It is also important to note that buying out your spouse’s share may not involve money from your savings. You might also sacrifice other valuable assets like your family home in exchange for ownership of the company.
For this option, you need to ensure that you know your business’s worth. Depending on the company and the market, you can establish this value based on the company’s earnings, the assets it holds or the sale prices of similar businesses in the area.
Some couples decide to sell the company and split the proceeds.
If co-ownership is not a viable option and you do not have the assets to buy your company from your spouse outright, you may need to sell the business. As with buying out your spouse, this option requires you to have an accurate assessment of how much your company is worth.
Through careful consideration, you can create a property division strategy that protects your interests and your financial future.