What Will Happen to My Family Business in Divorce?
You may be aware that your assets are split in a divorce. But what happens to a business that is jointly owned by both spouses? This is a complicated question that requires you to understand some basics about family law and how it works in Pennsylvania. In Pennsylvania, the spouses’ interest in the business that has been established throughout the course of the marriage is likely subject to equitable distribution during a divorce.
Marital and your family business
Before a business can be equitably distributed, you have to determine whether or not the business is marital property. The business usually is considered marital property if:
- The business was started during the marriage
- Both spouses contributed to the business in some way
- If funds by both spouses were used to start the business
Assuming that the business is, in fact, marital property, the court would have to determine the value of the business and then calculate what is owed to each spouse. This is usually accomplished using a business valuation expert.
Dividing the business under equitable distribution
Once both the value of the business and each spouse’s share in the business has been determined, there are numerous options for dividing the business. One option is to split ownership of the business. The former spouses might see fit to work together to run the business and act as co-owners heading into the future.
Another option would be for one spouse to keep their share of the business and receive income based on their percentage of ownership. These arrangements require the spouses to continue to work together and may not be appropriate for all couples. They nonetheless preserve each spouse’s stake in the business.
Another option is to sell the business and split the proceeds. This option allows the couple to completely separate from one another without having to work together toward the business. An alternative to this would be for one spouse to buy out the other’s stake in the business. Ultimately, either option would allow the spouses to go their separate ways.
Talk to a divorce attorney about your family business
Heading into the divorce process, you’re going to want to know what you want in regard to your family business. Conveying that desire to your divorce attorney is paramount to successfully negotiating a settlement you can live with.
If you and your spouse are getting a divorce and you both have ownership of a business, you should speak to a skilled and experienced divorce attorney who can help you evaluate your options and then negotiate a deal that meets your needs.
Talk to a Philadelphia Divorce Lawyer Today
The Law Offices of Lauren H. Kane represents the interests of divorcing couples in Philadelphia. Call our Philadelphia family lawyers today to schedule an appointment, and we can help you decide how to split your shared business in a divorce.
