Going through a divorce is difficult enough without having to determine what to do with a shared business. Business assets can greatly complicate the division of marital property. Fortunately, proper planning and open communication with a soon to be ex are key to finding an equitable solution.
Valuing the business
First, you need an accurate valuation of the business before any division of assets takes place. This often requires hiring a professional business valuator. The valuation will take into account assets, debts, goodwill and earning potential. Understanding the true value is essential for negotiating a fair settlement.
Dividing ownership
If the business is jointly owned, one spouse may choose to buy out the other’s share. Alternatively, selling the business and dividing the proceeds is another option. For sole proprietorships, options include splitting profits for a set period or granting the non-owner spouse other marital assets. Much depends on how involved each spouse was in the business.
Transferring operations
In some cases, one spouse will retain full ownership and responsibility for the business. This requires refinancing and removing the other spouse from legal documents. The non-involved spouse receives different assets of equal value. Support payments may also provide compensation.
Dividing business assets during divorce requires careful planning and negotiation. By understanding all options available, couples can reach mutually beneficial solutions while protecting the future of the business. Once you determine who retains control of the business going forward, or if you will sell the business entirely, you can ensure a fair distribution of the company’s worth as part of your divorce settlement.