When Marriage Ends: What Happens to the Family Business?

When a couple decides to split up, they must navigate the often-complicated process of dividing their assets. But what happens when a family business is involved? The stakes are higher, the emotions are stronger, and the legal considerations are even more complex.

A divorce can quickly turn a once-thriving family business into a source of conflict and tension. Who gets to keep the business? How is it valued and divided? These are just a few of the questions that can arise under such circumstances.

Is the business considered marital property?

Marital property includes all assets acquired during the marriage. If the business started after you got married, it will be considered a marital asset and be subject to division. Similarly, if a spouse contributed to the business directly by running operations or indirectly by supporting the other as a homemaker, both spouses will have an interest. However, a binding agreement like a prenup can specify the business as personal property owned solely by one spouse.

Valuing the business

Once it has been determined whether the family business is considered marital property, the next step is to value the business. This can be a challenging process, as there are many aspects to consider when determining the value of a business. Factors such as revenue, profits, assets and liabilities will all play a role in determining the value of the business.

Dividing the business

After valuing and determining each spouse’s stake in the family business, the couple must decide how to divide it. There are several options available, including:

• Selling the business and dividing the proceeds
• One spouse buying out the other’s share of the business
• Continuing to run the business together after the divorce

Ultimately, the fate of the business rests on the divorcing couple, although the court may have to issue a judgment on the way forward if there is no consensus.

Protect your financial interests during a divorce

One of the most crucial steps you can take towards safeguarding your financial interests and legal rights is having proper legal representation at such moments. Dividing a family business during divorce involves various legal and emotional intricacies, which can be overwhelming if you go it alone.