A business is considered property, which may be divided when spouses divorce depending on whether the business is considered marital or separate property. There are basically three ways to approach the division of property with regard to a business: co-ownership, selling the business and dividing the profits, or buying out your spouse’s interest.
In some situations, both spouses continue to own the business following divorce, believing that they can work together despite changes in their personal relationship. If you and your spouse have an amicable split, this certainly seems viable, however, if there is a great deal of contention between divorcing parties, it may prove difficult to remain co-owners and you may want to look at other options.
Another possibility for divorcing couples is to sell the business, divide the profit and forge ahead independently. Although you and your spouse can make a clean break, selling a business takes time and there is a level of cooperation needed to make it happen.
If one of the parties has in interest in continuing the business, buying out the other spouse’s interest in the business is also an option. The buying spouse can either use cash or other liquid assets to pay off their ex-spouse or, as an alternative, the spouse could offer a larger cut of retirement accounts or more equity in the home in exchange for the other party’s portion of the business.
If you are considering selling the business or buying out your spouse, a valuation of the business must be performed, preferably by a professional business appraiser. An appraiser will compile relevant information for the particular business and apply the appropriate valuation method. Sometimes spouses will secure separate appraisers or may hire one appraiser they can agree upon.
If you are considering divorce, marital asset division with a closely held business can be complex. Securing experienced legal help is key. Contact the Law Offices of Ronald L. Bell for help with complex divorce or other family law issues. We have successfully represented clients in Lake County Illinois and surrounding communities for over 30 years – call today for help.