Finding A New Path Forward

Who keeps the family business in a divorce?

On Behalf of | Apr 30, 2022 | Family Law |

When you and your spouse have dedicated a lot of time and money to a family business, it is challenging to decide what happens to it in a divorce.

The two of you must agree on which of the following three options works best for you.

Both of you keep the business

Even though the marriage is ending, you and your ex might agree to keep the family business together.  You should consider drafting a post-nuptial agreement explaining how you intend to split the profit and how to handle disagreements about the company. While this option makes it easy to divide assets, not all couples want to continue a long-term relationship with an ex-spouse.

Sell the business and split the profit

Selling the business is a good option if you and your ex can not come to an acceptable agreement about the company or if you both want to pursue independent projects. You can use the money from the sale to retire or invest in another business. Selling takes time and extends the divorce process.

One spouse keeps the business

When you want to keep the company but your partner does not, you can buy out your spouse’s share. You may decide to pay him or her the entire amount upfront or make payments over time. Since the law views this as a property transfer, your spouse does not pay taxes on money received.

Owning a family business makes divorce more challenging. Knowing the different options available to you allows both of you to make informed decisions about your investment.