- Consult with a knowledgeable divorce attorney to understand legal rights and obligations related to business.
- Determine the value of the business through professional valuation or a third-party appraiser.
- Decide on the future of the business, such as selling it, keeping it running, or dividing it into two separate entities.
- Draft a solid agreement that outlines each partner’s financial obligations and divides assets fairly.
- Finalize the divorce process by filing all necessary documents with the court.
Divorce is a challenging and emotional process that can be further complicated when you and your soon-to-be-ex-spouse jointly own a business. Dissolving a shared business during divorce requires careful planning, negotiation, and documentation to ensure both parties get a fair share of the assets and liabilities. This article will provide some tips for dissolving a jointly-owned business during a divorce to help you navigate this challenging process.
1. Consult with a knowledgeable attorney
When dissolving a couple-owned business during divorce, it’s essential to consult with a knowledgeable attorney who can guide you through the process. An experienced divorce attorney can help you determine your legal rights and obligations, including your ownership share, financial obligations, and tax liability during your divorce. Moreover, an attorney can help you negotiate a fair settlement that meets your needs and goals in the divorce. Look for an attorney specializing in divorce law with business dissolution experience.
2. Determine the value of your business
You need to determine its value before you can divide a jointly-owned business. The value of a company is an essential factor in determining the division of assets during divorce, and it can be challenging to determine accurately. Usually, a professional business valuation is necessary to decide on a business’s value. However, as you and your soon-to-be-ex-spouse are in dispute, you may require a third-party appraiser to prepare a proper valuation. They may consider such factors as the current market value of the company’s assets, income potential, and goodwill.
3. Decide on the future of the business
Once you have determined the value of your business, you need to decide on its future. Several options exist for dividing a company during a divorce. Depending on what you think is best for both parties, you could for one option or another. Here are some of them:
a. Sell the business
If you and your soon-to-be-ex agree to sell the business, you must negotiate a suitable price. Your lawyer can help you decide on a price and get it approved by the court.
b. Keep the business running
Some couples decide to keep their business running even after the divorce is finalized. You and your soon-to-be-ex must negotiate a fair division of the profits and losses.
c. Divide the business into two separate entities
Each spouse will receive an equal share of the company’s assets and liabilities in this option. You will need to negotiate a settlement that divides the business fairly between both parties, considering the value of each asset.
d. Negotiate a buyout
When negotiating a buyout, you and your soon-to-be-ex agree on the buyout terms. You must carefully negotiate how the buyout amount will be paid and other financial and legal considerations.
4. Draft a solid agreement
Once you decide on the future of your business, you need to document the division of assets and liabilities in an agreement. A good agreement should address each partner’s financial obligations regarding the company’s development and operation. The purpose of the settlement is to provide a clear understanding of each partner’s role and responsibilities after the divorce. The settlement should include business shares, tax implications, and dividing debt.
If the process is too overwhelming, you can contact other professionals for help. A financial advisor can help you determine the value of your business and create a proper asset distribution plan. You can also hire a mediator to help you resolve disputes during negotiations.
5. Finalize the divorce process
Once you and your soon-to-be ex have negotiated a settlement agreement and reached an agreement on the division of assets and liabilities, you can begin finalizing the divorce. Your lawyer will help you file all the necessary documents with the court to ensure your assets are divided fairly and according to the agreement. After all documents have been signed off, you can move on with your life and begin a fresh start.
Dissolving a jointly-owned business during divorce can be a complicated process. It requires careful planning, open communication, and legal counsel. Consulting with a knowledgeable attorney, determining the value of your business, deciding on the company’s future, drafting a solid agreement, and finalizing the divorce process are all essential steps in dissolving a jointly-owned business during divorce. You can navigate this challenging process and reach a fair resolution with proper preparation and legal guidance.