Should you and your spouse own a North Carolina business, it probably represents your largest asset and accounts for the vast majority of your family’s income. This makes your business especially important if you and your spouse divorce.
An article in Forbes explains that when divorcing married couples own a business together, they usually handle it in one of the three following ways:
- They sell the business and divide the sale proceeds accordingly.
- One spouse buys out the other’s business interest.
- They continue to jointly own and operate the business after their divorce.
Each of the above three options has its own benefits, but each likewise carries its own liabilities.
Sale
The biggest benefit that selling your family business will bring to both of you is that its sale will result in each of you receiving a major cash inflow that you can use as you respectively desire. On the other hand, it likely will cost a fair amount of money to engage a professional business appraiser to determine the following:
- Your business’s overall value
- The value of your and your spouse’s respective share
- A valid selling price for your business
Buyout
If one of you wishes to continue owning and operating the business after your divorce, but the other wants to leave it, a buyout by the spouse who stays of the business interest of the spouse who leaves may be your best option. Here again, you may well need to hire a professional business appraiser and/or an attorney to determine how much the leaving spouse’s business share is worth. Then the staying spouse will have to determine how (s)he will pay the leaving spouse. If (s)he cannot accomplish this via an exchange for nonbusiness marital property, (s)he may need to acquire venture capital, a new partner or some kind of a business loan.
Continued joint ownership
Of the three standard options for what couples do with their family business after the divorce, continuing to own and operate it with your former spouse may seem the riskiest. Admittedly, this option requires that both you and your about-to-be ex-spouse be mature adults who can, and will, separate your business lives from your personal lives. However, if you both love the business, work well together and can achieve this demarcation, this option represents the best one for your business itself because it will suffer no business interruption.
This is general educational information and not intended to provide legal advice.
