When a divorcing couple own a business together, or when one spouse owned the business prior to the marriage, there are unique issues involved in the division of assets. The focus should be on the protection and preservation of the business during the divorce process. The best way to do this is through Mediation or the Collaborative Divorce process.
Protecting a Business During Divorce Through Mediation or Collaborative Divorce
When spouses own a business, or one party owns the business, it is likely a large source of income for the family. In traditional litigation, both spouses may hire their own experts to value the business, which can be very costly. The spouses often fight over its worth. One party may work so hard to get what they feel is their entitlement to business profits that during the lengthy fight the business ends up going under, so there is finally nothing left to fight about.
That result can be prevented through Mediation or Collaborative Divorce. The focus centers on keeping the business and helping it continue to thrive if that is in the best interest of the entire family.
Hiring neutral financial experts. A neutral business evaluator can look at all relevant documents and tell the parties whether the business is profitable, and what its value is. What is the history of the business? What does the future of the business look? What is the value of the business?
There must be honest transparency between the parties for an accurate evaluation of the revenues and expenses of the business. It must be determined if the business can be maintained by one or both of the spouses if both were working in the business prior to the initiation of the divorce, or what should happen with the business.
Plans for business during the divorce. The parties need to be aligned and work together to preserve this asset during the divorce process so they can maintain an asset that will benefit both of them and their family in the future after the divorce.
Options for Division of the Business
Here aresome options for dividing a business:
- One spouse may buy the other out of the business.
- One-half of the value of the business can be negotiated by one party receiving more of the other assets of the parties, like the family home, retirement accounts, etc.
- The parties can agree to continue to work together in the business.
- The business can be sold.
When the parties are willing to discuss and review these options in order to preserve the business during the divorce process, the solution can be a win-win for the family.
For more information on working together to protect your business during divorce, or for assistance in all other aspects of the divorce process, contact us at Bruckner Hernandez Legal Solutions, LLC, to schedule a consultation.