Owning a business with your spouse poses challenges in a divorce. The business is an asset that you must allocate accordingly in the settlement. While some couples are amicable enough to maintain a shared interest in the business and operate it together, that is not always the case.
There are a few things to know when it comes to buying out a spouse’s business interest as part of a divorce.
Request a Business Valuation
You need an accurate assessment of the value of your business before you can establish the buyout amount. A clear valuation provides a starting point to allocate each party’s financial interest in the business.
Determine each of your financial interests
One party in the marriage may have invested more financially in the business or might be more responsible for the company’s operation than the other. Consider each of your roles and contributions to the business as you determine the percentage interest your spouse has in the company.
Consider a Cash Buyout
If you have the financial means, you can offer your spouse a direct cash payment equal to their financial interest in the company. This direct buyout provides you with a full controlling interest in the business.
Discuss A Trade For Other Assets In The Settlement
When you lack the financial resources for a direct buyout, discuss the potential of trading off other marital assets of equal value for your spouse’s interest in the business. For example, your spouse can keep a vacation home in exchange for giving you full ownership of the business.
Consider which solution works best for your business and financial situation.
