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Can you keep your business in a divorce?

On Behalf of | Dec 29, 2021 | Business & Commercial Law |

When you decide to divorce your spouse, you must think about your business. In most cases, it is at risk because it is property belonging to you and your spouse, even if your spouse did not directly have anything to do with it.

The Street explains that unless you plan with some type of agreement with your spouse, you are left with two options once you decide to divorce: buy out or sell the business.

Buyout

A buyout means that you pay your spouse the amount of money equal to his or her portion of the business. Generally, this will mean you need to come up with half the value of the business.

For most people, this is a very difficult thing to do, especially since all your assets are tied up by the divorce. You will only be able to use your separate assets to pay for the business. If you do not have the money, then a buyout is not possible.

Sell

Selling the business is probably not what you want to do. However, you may be able to have your spouse sell his or her portion of the business. While it is not ideal because you would end up with a business partner, it does help you to save your business.

The only other option is to sell the whole business. In this situation, you and your spouse would split the profits from the sale.

Ideally, you should plan for a divorce and protect your business through a prenuptial or postnuptial agreement. However, if you want to keep the business, you will need to come up with money or find a new partner.

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