WHAT HAPPENS TO THE FAMILY BUSINESS WHEN THE OWNERS DIVORCE?
Sometimes, after a couple in Colorado is married, they decide to establish a business together. Having a family business can be an emotionally and financially satisfying endeavor. However, even if the family business sees success, a couple’s marriage is not always so strong, and they may decide they are best off divorcing. When this happens, some important decisions must be made regarding what to do with the family business post-divorce.
One option is for one spouse to retain the family business and buy out their ex’s interest in the business. This may be preferable if one spouse is more emotionally invested in the business and if either has the funds to buy out their ex or is able to exchange the business for assets of a similar value during the property division process. However, this approach could have tax consequences, so it is important that both spouses understand the impact of this option before proceeding.
Another option that is not as common is for both spouses to continue owning the business together. Sometimes, couples can cooperate well enough to treat each other as business partners post-divorce. If a couple can be amicable, and if each party has a strong emotional and financial tie to the business, this might be an option worth considering.
Finally, sometimes a couple’s divorce is bitter and neither has an interest in keeping the family business. When this happens, they may want to consider selling the family business and dividing the proceeds. Once that happens, each spouse can pursue their own endeavors with no remaining ties to their ex. Of course, selling a business can take time, which means that the spouses will need to work together long enough to see the sales process through.
At the end, when couples who own a family business decide to divorce, there is no right answer of what to do with their enterprise once their marriage has ended. Much depends on a couple’s ability to cooperate post-divorce, as well as their ability and willingness to continue running the business, either as partners or solely. Since the family business can be one of the most valuable assets a couple owns, it is important that couples facing divorce do not rush into a decision on how to divide the family business. Instead, they should carefully consider all their options, so they can make the choice that is best for them.