You and your spouse started a Colorado business after you married. For years, you’ve both worked to make it a success. Now that you’ve decided to divorce, what happens to the business?
You have some options.
You might be two people who decide you work great as friends but not as a couple. If that’s the case, you can consider remaining business partners and sharing the decision-making and the profits. This is the easiest option, but it doesn’t work for every couple.
If this isn’t a solution in your situation, you have two other options: One of you keeps the business, or both of you sell it.
Either choice requires determining how much the business is worth. To do so, an expert who is a neutral party is hired to establish its value.
The spouse who has been running the day-to-day operations often wants to hold on to the business. It that applies in your case, you can begin discussions with your soon-to-be ex about buying their half of the business. This is what typically happens in a divorce, and it has tax benefits. The purchase of shares in a divorce isn’t a tax burden to either party.
If you don’t have enough cash to buy half of the business, a structured settlement can be arranged to allow the acquisition to be paid off over time.
The third option is to sell the business with both parties sharing the proceeds. A benefit is that you have a clean break where the business in concerned. A drawback is that selling a business can be a lengthy process and can draw out the divorce, and another is that you might have to continue working together under tense circumstances.
Whatever option you choose, you’ll want to involve your divorce attorney and your business attorney to guide you through the process.