Married couples may start a business together because they dream of working with one another or because they want to maximize their income based on someone’s professional qualifications. That business may have required thousands of dollars in initial investment funds and countless hours of unpaid contributions. It could also represent the primary source of income for one spouse or the whole family.
As the spouses who run or jointly own a business start thinking about divorce, they may have to plan for some potential property division challenges ahead. Two important considerations about the business will likely have profound consequences for the future of the business and the financial resources of each spouse.
Will the company continue operating, and if so, who will run it?
Some couples recognize that the company is only successful because both of them contribute to it on a daily basis. They may want to liquidate the business and close it down during the divorce so that they no longer have any shared legal obligations or liabilities.
Others may want to sell the business. In some cases, such as when one spouse has a degree or professional licensing, the most logical outcome would be to have one spouse continue operating the business. Having a plan for the company’s operations and ownership will be a key step in the property division negotiation process.
What is the company worth, and how will the spouses share that amount?
The business valuation process can be very complex and will likely influence most other major decisions related to property division and support. Looking at the company’s assets and its likely future revenue will play a major role in determining what the company is worth and therefore how the spouses will share its value.
In some scenarios, divorcing spouses can negotiate these terms in non-contentious ways and won’t have to worry about the uncertainty of family court. Other times, spouses may disagree about every aspect of how to handle the business, from who should retain it to what it is worth. Seeking legal guidance and identifying top priorities early in the divorce preparation process can make it easier for people to secure positive outcomes when they own complex assets like a business.