Regardless of the circumstances, divorce is complicated. Not only are the two parties dealing with their emotional feelings and the personal turmoil that comes along with divorce, but they also must sort out their assets, custody agreements and more. The process becomes even more complex when the couples owns a business together.
Those who are seeking a divorce in Erie County will find that they have several options to consider when they are splitting up a private business during their divorce. According to the American Bar Association, these are three of the most common options:
The buy out is easily the most common solution to this issue. In the event of the divorce, most couples decide that one party will buy out the other party’s interest in the business. At the time that the business is bought out, only one party is left as the sole owner.
It’s important to note that depending on the type of business that the couple owns together, there may be limitations as to who can continue to own the business outright. Some businesses require that a licensed individual owns the business, and that may dictate who can continue as the sole proprietor after the divorce is finalized.
In addition to considering licensing requirements, you also will want to discuss possible tax implications with your divorce attorney. It is important that you understand the full ramifications of a buy out before pursuing one in the divorce process. The right attorney will be able to advocate for you and help you decide if a buy out is the best option for you.
In some cases, a buy out is not possible or the couple cannot agree on who should take sole ownership of the business after the divorce is finalized. Typically, this leads to the sale of the business to a third party. If both parties in the divorce willingly agree to sell the business, then the process of dividing the assets is relatively simple. The business is sold, and the proceeds from the sale are divided equally between the two owners of the business. It should be noted that the sale of the business can come with its own set of challenges, depending on the type of business, the current economic conditions and the availability of interested buyers. Some couples may need to agree on a plan for business management that will be maintained after the divorce is finalized and until the business is sold.
However, in the event that one party refuses to willingly participate in the sale of the business, the opposing party may have to acquire a court order to proceed with the sale of the business. This can complicate matters, and can significantly change the approach to the divorce.
It’s certainly not the most common option, but some couples are actually able to proceed with the divorce yet remain dedicated business partners. This can be a difficult situation, especially given the personal nature of the divorce and the fact that most people leave with some degree of hurt, but it is definitely not impossible. However, if a couple does intend to continue as co-owners of the business after the divorce, they will need to create a plan with their lawyers that is mutually agreed upon regarding future management of the business. Exact roles need to be identified, and a plan for financial management needs to be created. This is the only way to ensure that two individuals who are no longer married can successfully run a business together.
When a couple owns a business together, and they decide to pursue a divorce, there’s a lot to consider. Recognizing the complicated situation at hand, it’s important that you hire an experienced divorce attorney in Erie County. The right attorney will be able to advocate for you and help you come to a solution regarding your business that is most advantageous to you, in light of your new situation.
For more information about divorce in Erie County, set up a consultation appointment with a qualified divorce attorney at our law firm today.