Breaking up a Co-Owned Business in a Divorce
Few things are more layered and filled with potential complications than figuring out what to do with a business owned by the spouses during a divorce proceeding. According to research by a professor at North Dakota State University, 65 percent of all U.S. businesses are family owned, with 30 percent of those being co-owned by married couples.
While opening a business with your spouse presents many potential advantages and opportunities, if things fall apart, some tough decisions will need to be made. It’s likely that this business took monetary and time commitments from both partners and also likely that the business is a major source of income for the family.
For the sake of the business, which both spouses likely have a large stake in, it’s important to make this process as smooth and amicable as possible. Here are some important thoughts to keep in mind.
Separate business from emotion: If you are going to continue to work together during the divorce process, it’s important to put barriers in between what’s personal and what’s professional. Make sure work is about work, and not about who’s a better parent or who is or isn’t at fault.
You need help: This is not the type of thing you should do yourself, legally or emotionally. You will need a business appraisal to determine the worth of the business. You’ll need the services of a family law attorney or a mediator with a business and finance background. It may be best for you to continue to work together, perhaps one spouse can buy out the other or roles may need to be shifted. It will also be helpful to have an emotional support system during this time, as bottling up emotions while working with your soon to be ex can be taxing.
Back away: Once an agreement has been reached, if you’ve determined to continue working together in the business, it’s highly advisable for one or both of you to take an extended break. Take time to clear your mind and assess. No matter how peaceful the divorce, there is always an acclimation period.
Have set roles and provide an escape clause: The best thing you and your ex-spouse can do once you’ve decided to continue to work together is outline what each person’s responsibilities will be. You want as little head bumping and paths crossing as possible. Also, no matter how well things seem like they will go, and no matter how good of a business partner your ex is, either or both of you may have difficulty working together in practice. Give yourself an out in the contract.
There are many examples of divorced couples who continue to successfully run businesses together long after their marriage has ended. You, your spouse and your legal counsel will have to determine what is best for you. Contact the family law attorneys at Posternock Apell, PC today. Call 866-879-8855.