A divorce can be a difficult process that is even more complicated when the divorcing couple owns a business together. When it’s time to divide assets, the business will certainly make up part of the couple’s total wealth and become a key asset in the dissolution process. But when both parties feel like they’ve put their blood, sweat, and tears into the business, how do you decide who gets to keep it? Does one or the other party necessarily need to?
If you’re a divorcing couple that built a business together, you should contact an Irvine divorce attorney to explore your options. Generally speaking, couples who wish to end their marriage and have a business to deal with have to choose one of three options: either one spouse buys out the other, they sell the business, or they remain co-owners.
Buying Your Spouse Out of a Business
The most popular choice for dealing with a business in a divorce is generally to buy the other spouse out and maintain controlling interests in the business. This is not always possible in businesses where a license is required, such as a medical or law practice, if you don’t have a license to practice and thereby own that business.
To buy out the business, the parties would need to have the business appraised to determine its fair market value. Once that’s been assessed, one party would agree to purchase the business for half its value.
Selling the Business
Sometimes spouses do not have enough cash on hand to buy one of them out of a business, particularly if the divorce is going to get costly. In that case, spouses may be forced to sell the business and divide the profits down the middle. This is often a common solution, though rarely preferred, as most couples usually want to keep some stake in a thriving business. This option might have some challenges, as it will depend vastly on the company’s profitability and marketability as to whether it will sell for the desired sum. Should everything go as the couple wishes, however, then the company would be sold, and they would divide its assets equally.
You Could Choose to Remain Co-Owners
While this is certainly the rarest option for couples who are getting a divorce, some may be amicable enough to decide to remain co-owners of the business. Whether or not that means they are actually working together from day-to-day can be decided by the parties. For example, one spouse could maintain responsibility for the functioning of the business and allow the other spouse to retain an ownership stake and a salary or dividend pay-out so they can reap certain benefits from the business.
Contact an Irvine Divorce Attorney to Weigh Your Options
If you’re the co-owner of a business with a spouse you no longer wish to be married to, you should consider all of your options with the assistance of an Irvine divorce attorney. Contact our offices today.