Starting a business with your spouse is one of the most exciting things you can do, but when you end up in a divorce, it can quickly become a source of frustration and even depression. After spending so much time, money, and effort building what you thought would be a solid financial foundation for you and your family, suddenly you’re getting a divorce, and now have to figure out what to do with the business.
Since owning a business together can put more pressure on your divorce, here are some tips for handling the situation without losing your peace of mind.
1. Hire a family law attorney
No matter how hard you try, managing a divorce involving a shared business is not going to be fun, and without an attorney there’s a good chance you won’t end up with a fair agreement in the end. That’s because dividing up a business fairly doesn’t always involve a 50/50 split. It’s far more complicated than that.
For a fair split, when one spouse earns more money than the other, they should get less of the business so the other spouse can compensate for the loss of income. Since both people have relied on two incomes to live, courts take earning capacity into account when dividing property. The spouse who will earn less money on their own will almost always get the larger share of property, including a shared business. This type of arrangement is hard to come up with on your own, and that’s why you need an attorney.
Even if your ex-spouse is willing to cooperate with you and wants to divide the business fairly, it’s much easier when left to a lawyer. They’ll know how to value the business and come up with ideas for splitting it where one partner gets paid out in cash. They’ll also point out small details that matter, like if your business requires a certain license to operate that only one of you possesses. In that case, selling the business to a third party might be the only fair option.
There are just too many individual details that can make splitting a business complicated, so your best bet is to hire a lawyer to handle it all for you.
2. Get a postnuptial agreement
If you don’t already know, a postnuptial agreement is a contract you create with your spouse after you get married that documents the ownership of various financial assets for the purpose of referencing in case of a divorce where you need to divide property. You can include details regarding your business liabilities in a postnuptial agreement. If you haven’t already gotten a divorce, it’s not too late to create this type of contract.
This might be an option for you if you’re not certain you want a divorce, but it’s still on the table as a possibility. Postnuptial agreements must be in writing and be fair to both parties. As with any legal document, it’s best to hire an attorney to create it for you and/or review it to make sure it’s solid.
3. Accept the possibility of selling your business
There’s a chance that during your divorce, you will need to let go of your business, either by selling it outright or taking a cash cut and walking away. This can happen if it makes the split more fair. Hopefully you aren’t too attached to the business, but if you are, it can be emotionally difficult.
The best thing you can do for your emotional well-being and peace of mind is to accept that you might have to give up running your business. Remind yourself that you’re free to start a similar business by yourself if it’s truly your passion. You’ll need to start from scratch, but you’ll have the experience and wisdom to avoid certain mistakes the second time around. That alone might give you a big advantage in your industry.
4. Be agreeable
There comes a point at which you can’t argue any further to get your way. If you’re up against a brick wall with your ex and you’ve already tried to have your attorney mediate the disagreement, for the sake of your sanity, be agreeable and just let go. Sometimes it’s worth taking a small financial hit if it means avoiding additional stress.
Take things one day at a time
The process of getting a divorce is already stressful enough; it’s even harder when coupled with splitting a shared business. For the best outcome and to keep your stress levels low, take things one day at a time and follow your attorney’s advice.
-
-
-
-
-
-
-
-
