How Can I Divide My Business During the Divorce?

The division of assets in a divorce can be extremely challenging when you and your spouse own a business. You’re probably worried about who will get to keep the business and what the divorce will mean for the future of your company.

There are a few options for dividing your business, but it’s useful to first understand how South Carolina law divides your property overall.

Equitable division of assets

South Carolina is an equitable division state. The assets you bought during the marriage – known as marital property – are all eligible for division. A judge will decide a fair division of assets based on factors such as each spouse’s financial status, contributions during the marriage, and the value of the overall marital property. However, this does not guarantee a 50/50 split between you and your spouse.

If you own a business together with your spouse that you started during the marriage, it will most likely be marital property and eligible for division. If you owned the business individually before your marriage, it is separate property and would not be available for division.

However, if you added your spouse to the business title or your spouse works at the company in a significant capacity, the court may rule the business as marital property.

Dividing your business

The first step to take when dividing your business is to determine its value. Requesting an unbiased third-party to appraise your business is the best way to find out the value appropriately.

Once you both agree upon a value, you have three general options when it comes to handling your business:

1. One spouse keeps the company. If one spouse intends to continue the business while the other does not, the spouse who wants to retain ownership can buy out the other spouse’s share of the business. This is generally the most common choice for divorcing business-owners.
2. Both spouses keep the business. While a rare choice, co-ownership is possible but can be challenging as divorce can lead to a dysfunctional business relationship. However, if you choose this option, it may be ideal to consider managing different areas of the business to ensure limited day-to-day interaction.
3. Sell the business. It can be hard to sell your business, but it is another possibility. If you or your spouse no longer have interest in the business or if you have goals of opening a new business in another state, you can sell the company to an outside buyer and split the proceeds.

Regardless of which option you choose, dividing your business during a divorce can be both stressful and emotional. You may want to consult with a South Carolina attorney to help you come to an agreeable solution with your spouse.