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What happens to a family business if you get divorced?

On Behalf of | Jun 5, 2024 | Community Property Division

It’s often true that business partners are also marital partners. A couple may get married and then decide to go into the restaurant business together, for example. One of them works as a chef while the other handles day-to-day business operations.

This arrangement can work tremendously while the couple is married, but things do get a bit more complicated when they get divorced. The business they own together is a shared asset. They have to divide all of their other marital assets, so what happens to the business?

Selling the business

First off, the best way to divide the business is often to sell it. The couple could sell the company to one of their high-level employees, for example, or find a third party who wants to buy it. They will earn money in the sale, and that money can then be divided.

Buying half of the business

If you would like to keep the business but your partner is interested in selling, you may have the option to buy their share. It can be expensive to buy half of the company, which makes this prohibitive for some people. But you may also be able to trade other marital assets, such as your share in a family home or a retirement plan.

Working together

Finally, don’t assume that you have to change anything. You could continue working together after your divorce. As long as you both retain your ownership, the business is still divided evenly between the two of you. You may simply need to draft a partnership agreement and other documentation for this change.

When dividing assets gets complicated, it’s crucial that you understand exactly what legal steps to take.