There are many challenging elements in a divorce, including emotional, financial and personal implications. One of the essential considerations is receiving a fair share of marital assets. But the process can be even more complex when a family-run business is in the picture.
Ending a marriage can be messy and complicated, but the process gets even trickier when both spouses are engaged in running the company. Going forward, each spouse must declare their intentions, whether to stay involved or how they want to divide the asset.
The three basic divorce options for family-run businesses
The first step is to get the company appraised by a neutral third party. Once the value is established, there are typically three options:
- One spouse keeps the business: One spouse buys out the other’s interest based on the appraised value. This is the most common method and is usually tax efficient. The couple can craft a settlement note to be paid over time if the buying spouse can’t afford to purchase it outright.
- Remain co-owners: Some couples decide to keep doing business together, and many make it work in instances where they have emotional ties to the company. However, others may find it difficult to do business together once a marriage ends.
- Both spouses sell: In some cases, both spouses want a clean slate and decide to move on by selling the company and splitting the proceeds. The catch is that it can take longer and lengthen the divorce process while both parties must find a way to work together until the sale is final.
Adopt a businesslike strategy when dividing assets
No single approach for dividing a family business works for every couple. Some may not have a problem working together even after divorce. However, others find it much easier to put the entire relationship behind them. An experienced family law attorney here in North Carolina can help you determine which method works for you to receive the best outcome and prepare for the next stage in your life.