You and your spouse may have worked together for years cultivating a family business in Harrisburg that has seen significant financial success. However, your marriage may not have been as successful, and you may one day find yourself facing a divorce.
Before dividing the family business, you and your estranged spouse will want to obtain an independent appraisal of the family business. Once you can agree on the business’ value, you can make informed decisions in the property division process. There are generally three options couples who own a family business can consider should they decide to divorce.
One spouse retains ownership of the business
One option is for one spouse to keep the business and buy out the other spouse’s share of the business. An advantage to this is that it is usually considered a transfer of property incident to divorce, meaning the transfer itself will not be taxed, although depending on the circumstances other taxes such as capital gains taxes may make an appearance.
Both spouses retain ownership of the business
A second option is for both spouses to keep the business. Cooperation here is key, as each spouse will have to clearly define what their role in the business will be post-divorce. While this may work well for the few couples who have an amicable split, many couples find working together causes too much friction and simply cannot cooperate on the level of business partners.
Neither spouse retains ownership of the business
A third option is for both spouses to sell the business, and then divide the profits from the sale. This option frees both spouses to start a new career or new business independent of their ex. Keep in mind that selling a business can be a lengthy process, which could subsequently draw out the divorce process. However, this option does provide both spouses with a clean split from one another.
Family businesses can complicate a divorce
It may go without saying that if you and your spouse share a family business and are now facing divorce, your divorce will be much more complex than some other divorces. Depending on the value of the business, property division can be one of the most important divorce issues business owners face. Family law attorneys can be a good resource for those who want more information on this topic.