Law Office of Lori Crystal, LLC
What to Do with The Family Business in A Divorce
Many married business owners in Colorado got their start as a young couple with little more than a great idea and an entrepreneurial spirit. They may have spent years or even decades cultivating their family business into a successful enterprise. However, sometimes the same thing can’t be said for their marriage and married business owners will decide to divorce.
However, when it comes to the family business, property division can be tricky. Many times, most of the couple’s business is their greatest asset, and oftentimes the resources simply aren’t available for one spouse to buy out his or her soon-to-be ex.
This means that in general couples are facing the prospect of either selling the business or incurring a great deal of debt. This is the case even if it was only one spouse who built and ran the business while married, as the business would still be considered marital property. However, there are options business owners have if they want to retain their business post-divorce.
While business owners may not have the personal resources to buy out their ex, they may be able to take out a loan from a bank to do so. A property settlement note may also be a way to buy out one’s ex. If the business is carrying a lot of debt, adding a partner (and executing a buy-sell agreement), may be an option for those who do not want to sell their business.
Of course, sometimes the above options aren’t feasible and the most fiscally responsible thing to do is to sell the business and divide the proceeds. One benefit of this option is that, if the sale is quick, both parties will have the funds in their hands to do with what they wish. And, once sold, neither spouse is tied to one another, at least as far as the business is concerned.
Family law can be a complicated matter, as exemplified by the quandary of what to do with the family business in the event of a divorce. While there are options for keeping the business, sometimes it is in the business owner’s best interests to sell the business instead. All of these are complex endeavors, however, and a person who finds him or herself in such a situation should not move forward without first seeking professional guidance.