Joint business ownership can be a thrilling way to make a living with a spouse, but it can become a major burden if your marriage ends.
For divorcing spouses who co-own a business, the path forward isn’t always clear. Whether it’s a small business or shares in a larger corporation, many people find themselves worried about what happens next, particularly concerning asset divisions.
There are three basic options in this scenario: both partners keeping their share of the business, one partner giving the entire business to the other, or making the decision to sell the business.
Of course, arriving at that decision is the hard part. Perhaps there’s no interest in pursuing joint ownership and a dispute arises over who gets to keep the business, or maybe one party would rather sell, but the other is taking a hardline stance against it. Sometimes, disagreement is based on uncertainty.
Three common questions that arise when dividing a business include:
- If we decide to divide the business, are both shares equal?
The short answer is that the shares will be equitable, but not necessarily equal. What that means is that there are numerous factors, including state laws, that might impact whether one spouse receives a larger share of the business or its assets than the other.
- Can I buy out my spouse’s share of the business?
If you feel the best route is to cash in on the enterprise or sell off stockholdings, but your soon-to-be ex-spouse refuses, your best option might be to buy their share, then sell the entire business on your own. Beware that this can take a lot of time, but it might help avoid stalling the divisions.
- Will continued joint ownership impact alimony or child support?
Calculations are usually a bit different for entrepreneurs, but the good news is that joint ownership might actually make it a more clear decision, since both parties are aware of finances and earnings. Since the division may not be totally equal, the income division will be considered when determining custody arrangements and support payments.
Detangling the stakes in a joint business can be complicated. An experienced attorney can answer these and other questions in depth to help you make the best possible decisions.