Divorce for Family Business Owners

Hinsdale divorce lawyerDivorce can be complicated even for spouses who share very little marital property. When part of your marital or shared property is a business, ownership interests and other rights regarding the business will need to be divided in an equitable manner. There are a lot of considerations that must be taken into account when dividing a business incident to high-asset divorce. For example, you may consider whether one of you owned the business solely prior to marriage, or if one of you does a majority of the work in managing the company’s day-to-day operations.

Business valuation is likely to be an important step in the process so that both parties - and the court, if need be - are fully informed. While each situation is different, some spouses find it better to negotiate and work out how the business is to be divided amongst themselves with assistance from their attorneys. It is important to work with an attorney who has experience helping business owners get divorced. 

Tips for Equitably Dividing Interests in a Joint Business Venture

There is a multitude of considerations that may go into equitably dividing a shared business. You may want to consider: 

  • Buy-out - One option may be for one spouse to buy out the other’s shares in the business. In the context of divorce, this may mean that one spouse keeps sole ownership of the business, while the other keeps other types of property roughly equivalent to what their ownership share is valued at. This may be a good option if one spouse is much more involved in running the business than the other. 
  • Continued joint operation - You do not need to be married to run a business together. If both of you are instrumental in the business’s operation and are amicable enough to work together in a professional context, then this may be a good choice. If your duties are well-divided enough that you would only need to have minimal contact with another, this option may work well. 
  • Profit splitting - If neither of you is directly involved in running the company, but rather, have employees that can manage the business with minimal oversight, this may be a good option. Profits may be divided 50/50, or in another manner that considers your respective contributions and continuing involvement.
  • Careful valuation - Before discussing how to divide interest in a joint business, both parties should know exactly what the business is worth. It is important to have a valuation performed. There is often a dispute between spouses as to the company’s value. You may elect to agree on who is to perform the valuation, or you may each have independent valuations done and accept the average. Your attorney can advise you of the different strategies available. 

You have options when it comes to dividing a shared business during divorce. It is important to speak with an attorney to ensure that you are well informed of what legal options you may have. 

Contact a DuPage County Business Valuation Attorney

Law Office of Martoccio & Martoccio is skilled in dividing shared business ventures when the owners are seeking divorce. Our experienced Hinsdale business valuation lawyers will strive to protect your interests in the business throughout these proceedings. Call 630-920-8855 for a free consultation. 

 

Source:

https://www.forbes.com/sites/catherineschnaubelt/2019/03/15/how-to-divide-the-family-business-in-a-divorce/

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