When couples open a family business together, it is often the realization of a long-term goal for both spouses.
However, many married partners in business together worry that their dream – as well as the success of the business – could be put at risk if they decide to divorce. So, what does happen to the business a couple owns in the event of a divorce?
How do spouses divide a business?
If a couple owned a business during their marriage, then it is subject to Kentucky’s property division rules – just like any other asset they own. However, hearing this can cause many business owners to worry. After all, a business is often a much more valuable – and complex – asset to divide.
In these situations, there are three strategies spouses can pursue:
- One spouse can buy-out the other and maintain sole ownership
- Spouses can sell the business and divide the proceeds from the sale equitably
- They can continue to co-own the business together after the divorce
If couples built their business together, negotiating a buy-out or a sale can be difficult. Often, neither spouse wants to give up all they have invested in the business.
It is not impossible to co-own a business after divorce, but as many people might imagine, it is not an easy task. Spouses must be able to separate all business matters from their personal life and feelings to move forward as business partners after a divorce.
So, how can spouses choose the best option?
As they approach a divorce, business-owning spouses must carefully consider:
- The details of any business agreements made with their spouse
- Their priorities for the business and the role they wish to play in its future
- Their relationship with this individual as a spouse and a potential continuing business partner
- Their ability to implement conflict-resolution strategies in terms of both the divorce and the business alike
The option that spouses choose depends entirely on their individual situation, history, goals and relationship. Therefore, each spouse must thoughtfully evaluate all of these factors to ensure they make the right decision for their business.
And regardless of how spouses decide to continue, it is critical that they understand how they can protect their business assets and achieve success after divorce.