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Litigation Blog.
The seasoned lawyers and litigators at The Rubinstein Law Firm are here to share their insights with you.

What could happen with a family business in a divorce?

One of the most difficult assets to deal with during a divorce is a business. Whether it’s a family operation or a long-standing company that has grown during the course of a marriage, determining how to divide it requires careful consideration. After the valuation and calculations, a separating couple needs to answer a big question: “What do we actually do with this business going forward?”

Generally, there are three primary options. Here’s a brief introduction of each.

1. Sell the business, split the proceeds

If neither partner wants to continue operating the business, they could opt to sell it, then divide the proceeds. This may sound like the simplest option, but it can be complicated. It may take longer than anticipated to find a buyer, and during that time you need to continue running the company. However, this option is worth discussing in situations where both spouses want a completely fresh start.

2. Buy out one spouse

A buyout is a common option if one party isn’t interested in participating in the business. Under this scenario, one spouse would purchase the other’s interest in the business for an agreed-upon price. Or, they may exchange other marital assets of equal value: “You take the cabin and I’ll take the business,” for example.

3. Continue as co-owners

If the separating spouses can get along and don’t want to give up their stake in the business, it is possible to continue co-owning the enterprise. This doesn’t mean the parties have to work together – one spouse could retain managerial responsibilities, while the other opts to receive a portion of future payments, based on shares. While this is not the most common resolution, it can work for some couples.