When couples divorce, they split their assets in a fair and equitable way. Sometimes that means 50/50, sometimes not. Some divorcing couples who own a family business decide, since they’re splitting everything anyway, that they will also sell and divide the business.
But what if you don’t want to keep your business running?
Fortunately, there are a few ways to keep it going despite divorce. Two examples are noted below.
Only selling half
Rather than selling the business, one solution is for one spouse to sell their share of the business to the other spouse, who will continue to operate the business. Perhaps the continuing spouse can afford to purchase the share him/herself, or they could take out a business loan. Or, they may bring on a new partner who can buy the existing spouse. They could even find investors.
Finally, the continuing spouse could surrender another marital assets to the existing spouse in exchange for their shares, for example, a retirement plan or the family home.
Not selling it at all
Another option is for the spouses to become business partners. People don’t have to be married to work together, and business owners don’t have to sell the business just because they’re ending their marriage. Simultaneous with divorce, they could, create a business partnership agreement or another contractual document to define their new relationship. If two people are still on good terms and it’s an amicable divorce, this may be a very reasonable solution.
At the end of the day, divorce can get complicated for business owners, but it’s not an insurmountable problem. Questions? Call Mark Tebelius at 651-738-3433.