Your family business is likely one of the accomplishments that you’re proud of, but it’s one that can become the center of disagreements if you’re married and you go through a divorce. There are several different outcomes that are possible for a family business when the owners divorce.
One of the first things to consider is whether there’s a prenuptial agreement or not. If there’s a prenup and it covers the business, the terms of the agreement will be followed. If that’s not the case, you and your ex will have to determine what happens.
Co-own the company
You and your ex may recognize that you can continue a business relationship even though the romantic relationship is ending. Having clear terms for pay and responsibilities is critical if this is the option you choose.
Close the business
Closing the business might be necessary if it’s not profitable or if neither party has an interest in keeping it open. You’ll have to determine how debts and assets for the business will be handled.
Sell the company and split the profit
If the company is profitable, you may be able to find a buyer for it. You and your ex must agree to the sale price and terms for this to occur.
Buyout by one of the spouses
Your or your ex may opt to buy out the other party’s interest in the business. This is typically the best option if one party doesn’t want to continue their ownership.
Unless you’ll continue to co-own the business, you’ll need to have a valuation done on it to ensure the sale or buyout price is appropriate. Having the terms of the applicable contracts related to the fate of the business spelled out in a legally binding and enforceable manner is critical, so it may behoove you to work with someone familiar with these matters.