While divorce is always life-changing, the stakes are particularly high when you and your spouse are also business partners. The end of the marriage could also mean the failure of the business, which could have a significant impact on your livelihood and that of your soon-to-be ex-spouse.
Fortunately, because it is fairly common for married couples also to be business partners, there are ways of handling a family business in a divorce that provide some financial assurance to both parties and allow the company to continue. According to Forbes, you and your soon-to-be ex may have to make some sacrifices to accomplish this.
1. Continue running the business together
If your split is amicable, it may be possible for you and your ex-spouse to continue to run the business together after your marriage comes to an end. However, it is not very common because many couples find that no longer being a couple makes it difficult to remain business partners.
2. Sell the business to a third party
Another option is to split the proceeds from the sale of the business to a third party between you and your ex-spouse. You can then use this money to retire on or fund another endeavor. Bear in mind that if you pursue this course, the divorce cannot become final until after the sale is complete. It can prolong the divorce process if selling the business takes a while.
3. Sell interests in the business to your ex
Either you or your ex could retain the business and buy out the other spouse. Of the three options, this one is the most common. However, if the business is a corporation, the buyer may owe capital gains taxes unless careful structuring of the sale takes place. It may also be difficult to decide which of you gets to keep the business.