One of the biggest issues divorcing couples face is the division of assets, which is done in a process called Equitable Distribution. When a family business is involved, dividing assets can be even more complicated. If both you and your ex are involved in a family business, how do you determine what share each person gets of the business? Do you both want to be involved after the divorce is final? Is that possible? What if other family members are involved?
There are many topics that need to be discussed when it comes to distributing the assets from a family business; however, there is one main decision that needs to be made – what happens to the business after the divorce? Below are a few scenarios to help.
- Sell the Business – If you and your divorcing spouse don’t want to own the business any longer, you can get it appraised and put it up for sale to ultimately split the proceeds. One issue that may arise with this scenario is having to work with your ex during the selling process – especially if the business takes some time to sell.
- Split the Business – Depending on how your business is structured, splitting the business based on its business units may be a viable option. In this case, one portion would be run by one spouse and the other portion would be run by the other. If the business units can’t be run separately, or cannot be split evenly, this may not be an option for you.
- Buy Your Divorcing Spouse’s Portion – A popular option for couples going through a divorce is to buy out the business from their ex. For example, if you and your wife own a business together equally, and it is valued at $200,000, you could offer to pay out your ex at $100,000 and gain full ownership of the business. If you don’t have the funds readily available, you could look into a structured agreement for payment and/or offer the amount by the means of other assets (e.g., house, cars, retirement, etc.).
- Continue Joint Ownership – Another option is to continue to own the business together. In this situation, both spouses would need to have a productive working relationship after the divorce is final. For some, this can be difficult and maybe even impossible; however, there are couples who are able to work together even better after their divorce is final.
Every couple is different and has their own, unique circumstances. That is why a divorce settlement is not a “one size fits all” agreement. We advise that you lean on legal experts to help you through the many steps and issues involved in resolving a divorce to ensure that what is decided is best for all involved – especially if a family business is a factor.
Over the years, Wilder Mahood McKinley & Oglesby has successfully represented hundreds of clients, ranging from small-business owners to shareholders in multimillion-dollar corporations. Our Pittsburgh family business attorneys can help you obtain an accurate business valuation, as well as assertively defend your interests in that business in the face of a divorce proceeding.
For more information about how our law firm can help you with your family business valuation and division concerns, contact us online or call us at 412-261-4040.