How Will a Divorce Affect My Family Business?

 Posted on February 15, 2023 in Family Law

A divorce can be a difficult and emotional situation for your entire family. As you and your spouse address issues related to the end of your marriage, you will need to separate multiple aspects of your lives, including determining where each of you will live and how you will divide the different assets you own. If you or your spouse own a family business together, or if either or both of you are involved in business ventures with other family members, these issues can complicate the situation even more. There are several important considerations to take into account when navigating your divorce and determining how your family business will be affected. Here are some issues you will need to be aware of during the divorce process:

Business Valuation

Regardless of whether your business is co-owned by both spouses, one spouse founded the business before getting married, or either of you is a partner in a business with other owners, it is important to have an accurate valuation of the business interests you own. A business valuation may be performed by a third-party appraiser or accountant, and it will provide both you and your spouse with a full understanding of this valuable asset.

If both spouses have an ownership stake in the business, the valuation can ensure that you will be able to consider these assets properly when dividing marital property. If one spouse owns a business separate from the other spouse, the valuation can help both parties gain an understanding of their respective financial resources, which will inform decisions about property division and may also affect issues such as spousal support or child support.

Dividing Business Assets

You and your spouse will be required to divide all of your marital assets, and you may need to consider a family business during this process if it was founded or acquired during your marriage. Depending on your family's circumstances, the needs of each party, and any other factors that may affect you and your spouse, you may have a number of different options for addressing ownership of the business.

In some cases, one spouse may keep a controlling interest in the business while ensuring that the other spouse receives other marital property of an equivalent value. In others, ex-spouses may choose to continue owning and operating a family business together, although in these cases, they will need to make sure their rights and responsibilities will be clearly defined. If necessary, you may choose to sell your business prior to completing your divorce, which will allow you to divide any profits you earn and reinvest them into other business ventures or the acquisition of assets following your divorce.

It is important to fully consider all options before making an agreement, including looking at the likelihood that the business may increase in value in the future, the ability of a business owner to earn income and profits in the years to come, and the tax implications of different arrangements. This will ensure that you can make decisions that will benefit you and allow you to maintain financial success after the divorce process has been completed.

Contact Our Waukesha Property Division Attorneys

If you own a family business, you will need to consider how your divorce may affect you, your spouse, and others who are involved in the business, such as customers and employees. With the help of the Menomonee Falls business asset division lawyers at Bucher, Wolff & Sonderhouse, LLP, you can gain a full understanding of the value of your business and the options for dividing your marital property, and you can make decisions that will protect your financial interests in the future. Contact us today at 262-232-6699 to arrange a free consultation and make sure you are prepared for success during your divorce.

Sources:

https://docs.legis.wisconsin.gov/document/statutes/767.61

https://www.eisneramper.com/valuation-closely-held-business-divorce-0415/