The divorce process can take a toll on individuals and the people around them in many different respects. The equitable division of marital assets can create or worsen many emotional and physical effects.
For high-asset divorces, the stakes and emotions can go even higher as disputes can be prolonged until both parties find a reasonable agreement or decision, especially when adding a family-owned business to the equation.
Three typical options for dividing a family business
Splitting a family-run company introduces a whole new set of challenges to what is already a complicated process. Each party must decide what, if any, involvement they want in the business going forward. The first step is getting an independent appraisal to determine the company’s value, after which there are three standard options:
- One spouse keeps the company: This is the most common option as the person who runs the business buys out the other based on the appraised value. In cases where the purchasing spouse doesn’t have enough capital, some couples create a settlement note to pay it off over time.
- Both spouses keep the company: Couples who both have deep ties to the company can make this work if their split is amicable. However, many others find it extremely challenging to remain business partners after a divorce, making it a less common option.
- Both spouses sell the company: This solution makes sense for former spouses who each seek a fresh start or those who may want to use their earnings to retire. One shortcoming is that it often takes longer and extends the divorce process while creating more stress for couples who don’t get along.
Choose the approach that makes sense for you
When it comes to dividing a family business, no single method works for everyone during a divorce. An experienced family law attorney here in Georgia can help you determine the path that works best for your emotional and financial well-being.