Is Co-Owning a Family Business With an Ex-Spouse a Realistic Option?

 Posted on April 21, 2022 in Divorce

Divorcing couples have many important financial issues to consider. When one or both spouses own a business, the financial complexity of divorce is amplified. The situation becomes even more complicated if the spouses owned and managed a family business together. Some spouses in this situation decide to sell the entire business and divide the proceeds equitably. This gives both spouses the opportunity to pay off debts and start their post-divorce life with some degree of financial security. Other couples decide that one spouse will keep the business and buy out the other spouse’s share with assets of equivalent value. Another option is to continue running the family business together as a divorced couple.

Keeping a Jointly Held Business After Divorce

Owning a small or medium business is no easy feat. A fifth of all small businesses fail before the end if the business’s first year. Half fail within five years. If you own a successful family business with your spouse, you may be hesitant to make any changes that threaten the success you worked so hard to achieve. You and your spouse may be fully committed to the business and unwilling to give up your share of the company during divorce.

If this situation describes you, you may be thinking about continuing to run the business together after the divorce. When deciding whether continued co-ownership is right for you, ask yourself the following questions:

• Do I trust my soon-to-be-ex spouse?

• Can we work together effectively, or will personal resentments or old hurts get in the way of business priorities?

• Will we be able to maintain an appropriate degree of professionalism?

• How will our decision affect our children?

• How will I ensure I set up the proper legal and financial protections?

Protecting Yourself Legally and Financially

If you decide that continued co-ownership is the right choice for you, it is important to work with an attorney who can set up the appropriate legal protections. A divorce lawyer experienced in business concerns can help you understand your unique rights and responsibilities in this situation. You may want to set up a partnership agreement that spells out exactly what each spouse’s role will be in the business. Make sure to include buy out agreements and buy-sell agreements in case either party ever decides he or she wants out of the business.

Contact a Kane County Divorce Lawyer for Business Assets

Co-owning a business with your ex-spouse is difficult but not impossible. To discuss all of your divorce options, contact the skilled St. Charles divorce attorneys at Goostree Law Group. Call our office at 630-584-4800 for a free, confidential consultation.

Source:

https://www.lendingtree.com/business/small/failure-rate/

https://www.forbes.com/sites/lawrencelight/2016/03/07/when-2-business-owners-divorce-what-to-do/