Divorcing couples have several options when it comes to dividing a business, and separating property.
For some Pennsylvania couples who are going through a divorce, separating marital property consists of more than dividing the family home, vehicles, furniture and assets. Couples who share ownership of a business have additional factors to consider when deciding who is entitled to what in the divorce settlement. The emotional affect that divorce has on some people can influence the decisions that they make when it comes to taking care of their business. Whether a couple chooses to sell the business and split the profits or continue working alongside one another, it is crucial that they understand all of their options when it comes to handling their business.
A look at the options
There are several things that a couple can do with their business after filing for divorce. If one spouse wants to keep control of the business, he or she has the option of buying out the other spouse's share or interest in the company. In order for this to work, the couple must come to an agreement on how much the business is worth, as well as how the payments will be made. According to the Wall Street Journal, the fair market value is used when selling a business to a third party. However, when the business is being sold to a co-owner, it may be difficult to determine the exact selling price. In some cases, each spouse may hire an appraiser to evaluate the company's worth, and the negotiations process can continue on from there.
When both spouses wish to be relieved of the business, they may decide to sell it to a third-party. The price used when selling to a third-party may vary depending on how quickly the couple needs to get out of the business. For instance, if a forced sale is necessary, the couple may have to agree upon a lower price than they would have had there been more time to wait for another buyer. The couple may also choose to split the company into separate parts or continue to run the business as co-owners.
Other crucial details
The details surrounding the division of a business ultimately depend on the unique circumstances surrounding the divorce. It is important to consider the following, according to Fox Business:
- How is the sale or transfer of the business going to be taxed?
- Which party invested the most time in the business?
- Was the business started before or after the couple was married?
- Is there a premarital agreement involved?
The couple may also look at whether the value of the company will change once it is sold to a third-party.
Obtaining legal assistance
A couple who is going through a divorce may find it helpful to have a knowledgeable attorney in Pennsylvania, who is available to answer any questions regarding the division of a family business. Furthermore, a lawyer may look out for your best interests and help to make sure you're getting everything you deserve in the divorce settlement.