Your Business and Divorce
Family businesses can present obstacles when dividing property. According to CBS News, there are approximately 3.7 million businesses in the United States that are jointly owned by married couples. Of course, each year many of those businesses are affected by the divorces of their owners. Furthermore, even businesses that are owned by just one spouse have a huge impact on property division during a divorce. In Texas, a family business is often considered community property, meaning it is owned by both spouses and both spouses have a claim to the business during a divorce. With that in mind, it is a good idea to consider how to handle a business during a divorce.
What was each spouse’s role?
Deciding what will happen to the business will largely depend on analyzing how much each spouse was involved in the running of the business. If one spouse is a dentist, for example, and runs his or her own dentistry business while the other spouse takes care of administrative work at that business then obviously the spouse who is the dentist is fundamental to the continuation of that business. In this case, the spouse who is the dentist may want to buy out the other spouse’s share in the business.
What is the future of the business?
Both spouses will have to come to an agreement about what they see as the future of the business. If neither spouse wants to keep running the business then the best option would be to sell it and divide the proceeds. Alternatively, if one spouse wants to continue running the business then she or he will need to buy out the other spouse. Problems may arise if both spouses feel personally attached to the business and insist on running it themselves. While continuing as joint owners of a business is possible even after a divorce, this option is usually not ideal because of the obvious risk of personal conflict being brought into the workplace.
Potential for disagreements
The main disagreement when it comes to a family business during divorce tends to concern valuation. As the Houston Chronicle points out, whether the business is being sold or one spouse is being bought out, both spouses will have to come to an agreement about how much the business is worth. Valuing a business can be difficult since the value of potential future profits, for example, can be very subjective. An experienced family law attorney can help clients by putting them in touch with a qualified valuation expert.
Family law
Divorce can be challenging, especially if the two people going through the divorce are also business partners. Fortunately, a family law attorney can help clients who are concerned about how their divorce will affect their business. By contacting such an attorney today, those going through a divorce will have the guidance they need to get through this difficult time.