Unfortunately, when spouses go into business together, they can be so wrapped up in the excitement of the business that they often avoid thinking about or planning for the possibility of divorce. Dividing assets in a typical divorce can be challenging. However, determining what to do with a co-owned family business can be especially difficult because the business is both a financial asset and a job.
Determine the best strategy for your situation
Three ways you and your spouse can deal with your business include continuing to own the business together, allowing one spouse to buy out the other, or selling the business and splitting the profit. Each option has benefits as well as drawbacks.
Continuing to own the business together allows you both to retain your interest in the business. However, this option forces you to continue business interactions with your spouse, which requires trust and cooperation.
If you or your spouse buys out the other, one of you will become the sole owner of the business and the other will receive money or other financial assets in exchange for his or her loss of ownership. However, you will probably both need to hire a professional to perform a valuation of the business to make sure that the deal is fair.
Selling the business will still require a valuation, but you can both walk away with money, which you can use however you would like. The risk with this option is that you may have to continue working with your spouse until the business sells.
How to get by in the meantime
Although you and your spouse will have to decide how you both want to go forward with the business, it can take time to reach an agreement and to implement any changes. Until that gets figured out, you may need to continue working together.
To avoid unnecessary conflicts, consider working with your spouse to clearly define the roles and responsibilities for you both until the transition occurs. You may also consider trying to separate emotional issues from legal and financial issues. This may help prevent personal issues from becoming disruptive to the business.