Divorce touches every aspect of your life, including, unfortunately, your professional life. For some it may be as straightforward as carrying an emotional burden into the office every day, but for business owners, it’s a little more complicated. If you’re a business owner considering divorce, do you know how the process will impact your business?
A big part of any divorce is the division of assets. In the eyes of the law, your business ownership may be considered marital property, especially if you started it during the marriage and your spouse contributed to making it a possibility. For instance, maybe your spouse took care of the household so you could focus on your business endeavor. Or maybe he or she contributed financially in the early stages when you were trying to get your feet off the ground. There are lots of ways a spouse can contribute to your business’s creation and success without being a co-owner or employed by the business in any capacity.
So if your business is considered marital assets, and marital assets have to be divided, what does that mean? Is your soon-to-be-ex going to get half of the business you’ve worked so hard to build?
You might be able to convince family court that your business is separate property. If this isn’t possible or if your spouse is in fact your co-owner, you still have some options for resolving this issue. Let’s take a look.
Option 1: You can buy out your spouse’s share.
If you have enough liquid assets outside of your business, you may be able to buy out your spouse’s interest in the company. This can be expensive and isn’t an option everyone can afford, but it’s a good path when possible because your spouse will feel that they are getting their fair share while you will be able to continue on leading your business as usual in your post-divorce life.
Option 2: You can remain co-owners post-divorce.
It is also possible to amicably remain co-owners. If your spouse plays an active role in the company, he or she will likely want to continue to do so. If not, he or she may comfortably settle into a role as a shareholder. How feasible either of these scenarios is will depend on the dynamics of your relationship as a divorce couple.
Option 3: You can sell the business and split the profit.
This option isn’t for everyone, but sometimes a divorce is the right time to move on in more ways than one. Some business owners choose to sell their businesses all together, let their spouse have their fair share, and use the money they make to start building a new dream.
If you are a business owner and you’re facing a divorce, the Sunshine, Isaacson & Hecht team can help you determine which path is right for you. We can guide you through the difficult process of negotiating and determining marital vs. separate property. If you have any questions about these matters or if you are ready to make moves to protect your business, contact us today. We can’t wait to hear from you!
It’s a cliché, admittedly. But the old adage that “an ounce of prevention is worth a pound of cure” rings particularly true when it comes to divorce. Even if an individual has the best of intentions, with emotions running high, one misstep, and what otherwise could have been a very simple matter, spirals out of control.
