If you are a business owner considering divorce, you may wonder what will happen to your business in the aftermath. The answer, unfortunately, is that it depends. There are a few different scenarios that could play out, and the outcome will ultimately be determined by several factors, including the state in which you live, the type of business you have, and the specifics of your divorce case. Here are some possible outcomes.
The business assets could be divided.
The first scenario is that your business could be considered a marital asset and divided between you and your spouse in the divorce. This is most likely to happen if you own a traditional brick-and-mortar business or if your business is relatively small and not highly profitable.
If this is the case, you and your spouse must agree on dividing the business’s assets, which can be a complex and contentious process. For example, you may need to agree on who will get the physical premises of the company, who will get the equipment, and how any outstanding debts will be paid off.
You may also need to agree on the business’s value and how this will be determined. This is important because, if your divorce goes to court, the presiding judge will likely use this number to help determine how much money you will be awarded in the divorce settlement.
The business could be awarded to one spouse.
The second scenario is that your business could be awarded to one spouse as part of the divorce settlement. This is more likely to happen if you own a large or highly profitable business or if one spouse was predominately responsible for running the business during the marriage.
Even if your business is awarded to one spouse, the other spouse may still be entitled to a portion of the profits generated by the company after the divorce. For instance, if the business was started during the marriage or if both spouses contributed to its growth, the court may decide that the non-owning spouse is entitled to a percentage of the business’s future profits.
The court may also award the non-owning spouse a share of the business if it is determined that the business would not have been profitable without the spouse’s contributions. For example, if the spouse worked for the company without pay or took on additional responsibilities at home to allow the business owner to focus on work, the court may decide that the non-owning spouse is entitled to a portion of the business’s profits.
The business could be the subject of a lawsuit.
The third scenario is that your business could be the subject of a lawsuit in the divorce. This is most likely to happen if your business is large and profitable or if there is significant disagreement between you and your spouse over who should get the business in the divorce.
If you are a business owner considering divorce, it is crucial to seek legal advice as soon as possible to understand how your business may be affected. An experienced divorce attorney can review your specific situation and advise you of your options.
Remember that if it all leads to a lawsuit, the court will ultimately decide who gets the business, but the process can be lengthy and expensive. In addition, the court’s decision may not be what you or your spouse wanted, making it difficult to move on after the divorce.
The business could be sold.
The fourth scenario is that you and your spouse may decide to sell the business and split the proceeds evenly between you. This is often seen as the best solution when there is significant conflict between the spouses over who should get the business or how it should be divided.
It can also be a good option when neither spouse has any particular interest in continuing to run the business after the divorce. Selling the business can also be a good solution if one spouse is awarded the company in the divorce but does not have the financial resources to buy out the other spouse’s interest.
If you decide to sell the business, you will need to agree on its fair price and how it will be marketed. You may also need a business broker to help with the sale.
The business could continue to be run by both spouses.
Finally, the fifth scenario is that you and your spouse could keep the business going and operate it together. This can be a good option if neither of you wants to see the business go under or if you feel confident that you can work together amicably post-divorce.
However, there are some risks associated with this option. For example, any disputes between you and your spouse over how the business is run could lead to tension and conflict. In addition, if one spouse decides to leave the business after the divorce, this could harm the company.
If you and your spouse decide to keep the business going after the divorce, it is vital to have a written agreement outlining your roles and responsibilities. This agreement should also include provisions for what will happen if one spouse wants to leave the business or if the business is sold.
If you are considering divorce and you own a business, it’s essential to understand how that business may be affected by the divorce proceedings. In most cases, the business will be treated as a marital asset and either divided between the spouses or awarded to one spouse as part of the overall settlement. However, selling the business and splitting the proceeds may be preferable in some circumstances. Ultimately, it will depend on your specific situation and what is best for both parties involved.