It goes without saying that any divorce entails multiple issues. But if you and your soon-to-be former spouse own a business together, this sets up a whole group of potential problems that most divorcing couples do not face.
New Jersey law requires that you and your spouse equitably divide your marital property between you when you divorce. An article in Forbes reports that you have the following three basic options when it comes to your family business:
- Sell the business and equitably divide the proceeds
- One of you buy out the other’s ownership share
- Continue to own and operate the business together after your divorce
If neither of you has any particular interest in continuing to run your business, selling it can give both of you a major influx of cash. Selling, however, requires that you first determine your business’s overall value, plus the value of the ownership share each of you possesses. This may well require you to engage the services of a professional business appraiser. (S)he can ascertain these values and also help you decide on your selling price.
If one of you wishes to retain the business and the other feels comfortable leaving it, the staying spouse can buy out the leaving spouse’s ownership interest. Here again, you or your professional business appraiser will need to determine the amount of the buyout. Once all parties agree, the staying spouse can then do one of the following:
- Give the leaving spouse other non-business marital property equal to his or her business share
- Attract a new business partner and/or venture capital with which to pay the leaving spouse
- Take out a business loan with which to pay the leaving spouse, possibly over an agreed-upon period of time
Continued joint ownership
If both of you love your business and wish to remain active in it, you should consider how you can achieve a viable post-divorce working relationship. This will require both of you to separate your personal lives from your business lives. You should also enter into a written partnership agreement that specifically states how one of you will buy out the other if such becomes necessary in the future.