Who wins and who loses when it comes to divorce? This type of thinking has ruined many family businesses.
Running a business, just like being in a marriage, is a collaborative process. Sometimes, that process breaks down and needs a significant change. However, the end of a marriage does not necessarily mean the end of your business, even if you and your spouse are running the operations together.
The main paths
As explained on Forbes, there are basically three things that could happen to your business during divorce. They are:
- Either you or your spouse maintains ownership
- Both of you maintain ownership
- The marital estate sells the company to a third party
The essential considerations
Depending on which path you take, you would have different considerations to make. If you decide to continue running a business together, for example, you may need to draft a new partnership contract to replace the default joint ownership you had as a married couple. You may also decide to change the structure of your business, such as from a sole proprietorship to an LLC.
If you decide to sell, or if you decide that one of you is more interested in the business than the other, then you will probably need to do some research and determine exactly how much the company is worth. This evaluation would help you get a fair price during your sale or help you carry out an equitable division of property, depending on the situation.
The caveats
There is a chance that all of your business interests will fall neatly into one of these three categories. You will probably need to be firm about your interests and preferences for division of your company or companies, but also open enough to avoid unwelcome and unnecessary losses to your marital estate.
