If you and your spouse have decided to obtain a divorce but own a South Carolina business, this business and how you divide it likely will become one of your biggest divorce considerations.
A recent report in Forbes sets forth the following three options most divorcing couples have when it comes to the question of what to do with their family business during a divorce:
- Sell the business and split the proceeds
- One spouse buy out the other spouse’s share
- Continue owning the business together after the divorce
Whether or not you and your spouse will want to sell your business likely will depend on how attached you are to it. If it has been passed down through the family for generations, selling likely does not represent a feasible option. But if neither of you has any particular attachment to it and would just as soon pursue other opportunities, a sale could be your quickest way of garnering substantial funds that you can use as you please. On the other hand, in order to sell your business, you must first establish its value and set a realistic selling price. This likely will involve your hiring a professional business evaluator whose services probably will not come cheaply.
Should one of you choose to buy out the other’s business share, again you will first need to establish not only the overall value of the business, but also each spouse’s share in it. Then the remaining spouse will need to determine how to compensate the leaving spouse. Generally (s)he will have the following choices:
- To attract a new partner or other source of capital with which to pay the leaving spouse
- To give the leaving spouse non-business marital property equal to the value of the leaving spouse’s business share
- To obtain a business loan with which to pay the leaving spouse the value of his or her share over time with interest
- Continued joint ownership
While this option may seem nothing short of ridiculous at first, it likely will surprise you to learn that many divorced couples continue to own and operate their family business together. In order for this arrangement to work for you, however, both you and your about-to-be ex-spouse must have the maturity necessary to able to separate your personal life from your business life. In addition, you should enter into a written partnership agreement that specifies not only which business responsibilities each of you will assume, but also how one of you will buy out the other should that need arise in the future.
This is general educational information and not intended to provide legal advice.