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What Happens When Spouses Own Businesses Together In Divorce?

When spouses decide to divorce, the complex areas of dissolution begin to reveal themselves in many ways. If they share children, how are they going to split their time? Who will pay child support? Will one receive spousal support? How will they divide their shared property?

When couples own a business together, the marital split — and the details therein — become considerably more complicated. At Whitmarsh Family Law, our Los Angeles, California divorce attorney is experienced in providing solutions for spouses who co-own businesses, so they are able to move forward with their lives separately with confidence.

What Solutions Are Available For Divorcing Spouses Who Co-Own Businesses?

Every married couple who co-owna a business, or businesses, together is unique. Your circumstances may be very different than another couple, and each solution will differ accordingly.

There are many things to consider when co-owners divorce, including the tax implications, and the balance of the financial consequences. However, there are several solutions that are available to each couple, based on their specific conditions.

Option One: One Spouse Keeps the Business

One spouse may offer the other a buyout for their portion of the business, so s/he is able to retain it wholly on their own. This approach may require a professional business valuation to determine the total ownership interests, and what the buy-out amount would be. This approach may also be subject to negotiations and is typically the most common when divorce is the driving factor.

Option Two: Both Spouses Continue to Own the Business Together

For some, divorce does not mean they are unable to continue owning a business together. This is common when both spouses are partners with several other individuals and are able to amicably dissolve their marriage.

Option Three: The Spouses Sell the Business and Split the Proceeds

Much like spouses often decide to sell the marital home during a divorce, split the proceeds, and go their opposite ways, business ownership can be handled the same way.

This option requires the spouses to divide the responsibilities of the company’s operation until it sells, and to determine — together, or through negotiations — how they will evaluate the fair market value of its sale.

Preemptive Protection For Married Couples Who Co-Own Businesses

When couples decide to start a business together, there are often no operating agreements in place, as the business has been built and formed by two people who were planning to spend the rest of their lives together.

For each spouse’s protection and future financial stability, Los Angeles prenuptial and postnuptial agreements can be designed to ensure everyone’s interests are safeguarded going forward. These legally binding documents provide clarity, speed, and reduced expenses that protect both parties, and the business, in the event of a divorce.

If you have questions about business ownership and divorce, or would like to pursue a legally binding nuptial agreement to protect your business interests, our Whitmarsh Family Law Los Angeles County divorce attorney will provide answers during a free consultation by calling (310) 879-1980 today. 

Whitmarsh Family Law, PC

1900 Avenue of the Stars, Suite 1800 B
Los Angeles, CA 90067
310-552-3505
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