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Property division and co-owned business interests

| Aug 28, 2020 | Property Division |

If you or your spouse has acquired an interest in a business during your marriage, you will now have to divide it as part of your marital property in the divorce. 

After the professional appraisal, which should reveal the fair market value, you will have a better idea of which of three options would work best for you and your spouse. 

Buyout

According to the American Bar Association, a business owner who has considerable interest in continuing to run the company may want to buy out the other spouse’s portion. You could do this during the property division process if you have enough other assets to make a fair trade. For example, if your split equity in the family home is enough, you may want to trade your half for your spouse’s portion of the business interest. 

Using cash or liquid assets from the business or obtaining financing to buy out the other spouse may also be an option, depending on the value of the business and other matters. 

Sale 

It may be easier for the two of you to sell the business, split the proceeds and move on with your lives. This, of course, depends on the market, economic conditions and whether selling would be profitable. 

You both will likely have to agree to the sale, or else the one who wants the sale may have to seek a court order to do so. 

Co-ownership 

Can you continue to work with your spouse after the divorce? If the two of you can put the emotions of your marital relationship behind you and move forward as colleagues, then you may want to create a new partnership agreement and remain open for business. 

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