Divorce can complicate matters when a family-owned business is in the picture.
Determining the future of the business requires careful consideration of various factors.
Nature of the business
The type of business plays a significant role in deciding its fate post-divorce. If one spouse initiated the business before the marriage, they may have a stronger claim. However, if both spouses contributed equally, an equitable division is more likely.
The financial support provided by each spouse during the marriage is another important factor. Active involvement in the business’s day-to-day operations can sway the decision. The court considers how much each partner invested in terms of time, effort, and financial resources.
Valuing the business accurately is a necessity. Once you establish the value, the court can determine how to distribute its assets. One spouse may receive assets equivalent to their share in the business.
When a divorce involves children, their well-being becomes a priority. The court may consider the needs of the children when deciding who gets the business. Financial support for the children may influence the outcome.
In some cases, both spouses may wish to retain ownership of the business. Co-ownership is an option, but it requires effective communication and cooperation to make it work.
Selling the business
Selling the business and dividing the proceeds is an alternative solution. This option ensures a clean break and an equitable distribution of the business’s value.
In 2022, Connecticut had a divorce rate of 2.5 per 1,000 population in 2021. Each of those divorces had its unique nuances. For people who know that dissolving a marriage is the right choice, having a business can complicate the situation. Clear communication and cooperation can streamline this intricate process.