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Divorcing with a family business: What are your options?

According to the Census Bureau's data from 2007, approximately 3.7 million businesses are family businesses owned by spouses. Considering that more than 50 percent of marriages end in divorce, it shouldn't be surprising that deciding what to do with a family business during divorce is a common problem.

Yet, every divorce is unique and no solution is one-size-fits-all. An experienced divorce lawyer can help you determine what is best for you by evaluating all of the options.

Selling the business to, or buying out, your spouse

One of the most common agreements spouses make is for one spouse to keep the business and buy out the other spouse.

A business is considered property during a divorce and can be divided like all other assets and debts you and your spouse own. After business valuation, the spouse who would like to keep the business can pay the other spouse for his or her share of the business' value.

This is a good solution when a business is a viable business that one spouse would like to continue to operate.

Selling the business and dividing the assets

In many cases, it would simply be impossible for one spouse to run the business alone. In others, neither spouse would like to continue to operate the business. Spouses may choose to sell the business and split the proceeds, or they may simply close up shop and divide the remaining assets and debts.

Dividing business assets is a complicated process, since many assets are intangible, but there are ways to determine an approximate value.

Keeping the status quo

In unique cases, such as where a business is profitable and the divorce is relatively amicable, some spouses decide to continue as business partners after a divorce. In order to make this option work, you must set very clear expectations in your divorce agreement and be able to both trust and respect each other. If you haven't done so already, now is the time to create a business agreement that details what should happen if one person wants to sell the business or make significant changes.

Learn more about dividing assets during divorce by visiting our page on equitable distribution of assets.

Source: The New York Times, "When couples divorce but still run the business together," New York Times, Byran Borzykowski, Dec. 5, 2012

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