Dividing A Family Owned Business In A Divorce

The situation is more complicated if both wife and husband have been actively involved in the business. The court may set up an arrangement by which one spouse has the right to buy out the other spouse over time. Alternatively, the right to buy out the other could be sequential-first given to one spouse for a certain period of time, then to the other spouse for the same period of time. As with handling division of the family home, a forced sale might be an option if neither party can buy out the other party (although most courts would favor giving the business to just one spouse rather than dissolving an ongoing business). 

If the court thinks the parties can continue to work together despite the divorce, the court may continue the status quo with the husband and wife remaining as business partners, even though they are no longer marital partners. 

Valuation of family businesses can be tricky. A closely held business does not have a value that can be readily ascertained on a stock exchange. If the business is of sufficient size, it could be worth the parties’ efforts to hire experts such as accountants to evaluate the business, assuming the value of the business is disputed or uncertain. On the other hand, if the business is very small or clearly does not have a significant positive value, it probably will not be worth the time and money to thoroughly evaluate the business. 

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