It doesn’t come as a surprise that a majority of entrepreneur couples are constantly challenged by divorce cases. After all, divorce incidences are popular nowadays. In some states, the rate of divorce stands at 50%. This means that for every two marriages, one is bound to fail.
When a couple that co-owns a business goes through a divorce, the situation puts a strain on the business operations, especially when the two can’t sit and discuss business matters. Given that such a business injects income for both parties, and most importantly, benefits the kids, it’s always important to try to save the business lest it fails.
In the Event of a Divorce, What Are Your Options?
This is a common concern among most entrepreneur couples who contemplate divorce. Normally, you have four options:
- Continue running the business together as joint owners
- Pass the ownership of the business to a different person
- Give the rights of ownership to one spouse
- Choose to close down the business completely
The first option is often ideal when you and your spouse don’t mind associating for business purposes even when you no longer remain married. This option should, however, be considered very carefully. For instance, you need to answer one important question: after you’ve finalized the debate, are you in a position to see your ex on a daily basis and work with him or her to run the business?
If you the answer is a ‘NO’, then you need to consider other options that might make more sense to you. And if the answer is a “MAYBE” then you can give it a try—continuing to own and run the business as a divorced couple.
If it happens that you cannot co-exist anymore, then the second option may be ideal. Besides, selling the business allows you to get the capital that you need to start a new venture. In some situations, you may agree to give the rights of ownership to one member. This happens when there are several businesses that you co-own and thus agree to sub-divide them.
The last option should only be considered if you don’t see any hope in the success of the business when you are divorced and you don’t want to pass the right of ownership to an outsider. You can sell the assets and transfer the benefits to a living trust for your designated beneficiaries (known as the successor trustee) to enjoy at your death. You can talk to Chris Johnson for a professional advice on living trusts. You will be directed on the best trust options to take depending on the value of your assets.
What Happens When You Decide to Run the Business as Couple After the Divorce?
This requires you to clearly distinguish business matters from personal matters. If you do, the business can continue to thrive despite the two of you living separate lives. The process is not an easy one, and so often, you’ll be expected to go against your principles and other life ideologies for the sake of the business. It begins by consulting an expert divorce lawyer. The attorney will help you define your business roles and set the ground rules to use to maintain the productivity of the business and prevent heartaches in the future. This prevents confusion and laxity when it comes to running the business and making important decisions. In the long run, the business will be able to make profits and remain relevant.
What If the Post-Divorce Joint Ownership Fails?
If you try to run the business following a divorce and it turns out to be complicated, you may consider selling it. So, one party can buy the other out. This is a good take when you don’t want an outsider to own the business despite being separated from your marriage partner. It’s regularly a better decision when you have kids and a family name to protect. To determine how much one spouse should pay the other for the complete ownership rights, you’ll need an expert attorney to determine the rates.
Though a divorce often complicates the running of a business that you co-own with your marriage partner, you can always go through it successfully. If separation is imminent, you should call a divorce attorney immediately or visit https://www.azranassocies.com/en/services/family-law/.