Family businesses are a big part of the American economy. Many couples launch them as a way to create wealth for generations. These are also often passion projects. People are very connected to their businesses and usually do not want to lose them.
This can become a problem if a couple decides to get divorced. The family business is an asset they own, so it has to be managed in some fashion. One of the easiest ways is to sell that business and then add the money that is earned from the sale to the broader value of the couple’s marital estate.
But problems can arise. Couples may not relish the idea of losing their business, they may think that its value is only going to be higher in the future, they may have trouble selling it or something else entirely. In other words, there are a lot of different reasons why people won’t want to sell their business. Do they have any other options?
They can keep working together
One option is that they can simply become co-owners. Spouses can still get divorced and divide their other assets. They simply keep the business ownership set up just the way that it was before. After all, many business partners are simply co-workers and are not in a romantic relationship. Some couples are able to divorce and then change their relationship to a professional one, rather than a romantic one. This won’t work for everyone, but it is a potential option.
One person can “buy” half of the business
Another common option is to decide that one person is going to keep the business. They may give up other marital assets in exchange for it. The other person takes over complete control of the business and is now the sole owner. The main drawbacks to this are financial, as it can be expensive.
The above are the three basic options to use when splitting up a family business. Seeking legal guidance can help a couple to make informed decisions about their options, including “trading” the value of the business as a whole for another valuable asset, such as a marital home or retirement benefits.
