If you and your spouse jointly own a family business and subsequently decide that you will no longer remain married, you must now figure out what to do with your company in addition to how you will separate your personal lives.
In making choices about your business, you may need to consider a variety of factors including tax implications and your personal goals.
Three options for divorcing business owners
Depending on the circumstances, you and your spouse may feel capable of continuing to operate your business together even after you divorce. You may wish to clearly outline each person’s area of responsibility and how you will handle any potential conflicts that arise before finalizing this decision.
As explained by Forbes, one spouse may choose to leave the business while the other person remains as the owner. In this scenario, the spouse that keeps the business may make a one-time payment to the other party. The couple may also enter into a longer-term payment plan to compensate the other spouse. Evaluating any potential capital gains taxes here may be important.
Finally, selling the business to a new owner may be an option that you and your spouse prefer.
Agree on the business value
Regardless of the choice you make regarding your business, you will need to agree on the valuation for the business prior to making any changes.
This information is not intended to provide legal advice but is instead meant to give divorcing spouses who also co-own a business together an overview of some factors they may review in assessing how to address their business when their marriage ends.