According to the National Federation of Independent Business, approximately one million businesses are co-owned and operated by married couples. So, what happens when the couple decides they want to pursue divorce?
It is essential to maintain the business throughout divorce—especially if it is the sole source of income. If the two parties are unable to agree on an equitable distribution of the business assets, matters can become especially complicated.
The easiest way to go about handling a business during divorce is for one partner to buy out the other; however, this cannot be completed unless a fair valuation of the company is determined. It is important to begin this process early and to settle as soon as possible. Dragging out the process will only lead to further litigation and higher costs, and could also have a negative impact on the business’s operations.
However, a financial buyout is not always possible. The partner that wishes to continue operating the company may not have the proper funds to make this happen. Or perhaps both parties play a unique role in the operation of the company, and the other partner cannot easily fill their shoes.
If both partners are needed to operate the company, or neither party is willing to forgo their claim, it may be possible to continue the business relationship despite the dissolution of the marriage. This is more likely to be achieved if the couple dissolves their marriage through mediation or a collaborative divorce. To be successful, there will need to be a lot of discussion and agreement concerning business operations that can only be done outside of a Courtroom.
Another option may be to sell the business to a third party and divide the proceeds. As in a buyout of a spouse’s interest, a fair valuation must be determined to sell a business. Having experienced divorce counsel can help to ensure that the business is fairly valued and divided.
Contact Law Offices of Parnell, Michels & McKay
Our law practice covers every area of family law and includes all divorce and post- divorce issues, unwed parenting and property issues, domestic violence, adoption, guardianships and other family issues. Our family lawyers ensure that our clients understand the law as it applies to the issues they are facing. We are sensitive to the relationship changing between couples and work to bring the issues to a conclusion promptly and fairly with sensitivity and compassion. Contact our office today and we will help you with move forward with your legal separation, divorce and post-divorce issues.