Divorces are inherently complex, and where a jointly owned business is involved, things can get even more complicated and messy. We asked a panel of experts to share their thoughts on how to equitably divide business responsibilities and assets in the wake of a divorce. Here’s what they had to say.

Russell Knight

Russell Knight

Russell Knight is a family law and divorce attorney in Chicago, Illinois. Find him here: rdklegal.com

Hire a business valuation expert

There are so many ways to divide a business in a divorce. The most common way is to hire a business valuation expert to approximate the value of the business. The spouse that wants to keep the business then pays off the other spouse in a lump sum or payments based on that valuation and their marital portion.

But, business valuation is not an exact science. If the parties don’t agree on the value of the business or its marital portion, the parties will have to present two business valuation experts to provide competing testimony as to what they believe the marital portion of the business is worth. This is extremely expensive.

Half of a business is a lot of money. Most businesses can’t raise that kind of capital for a payoff to one spouse in a divorce. So, alternative arrangements can be reached. One spouse may be made a silent partner in the business who will simply receive dividends on an ongoing basis with an option to sell their portion of the business to the other spouse at a later date and at a price determined by a predetermined formula.

Literally, any arrangement is feasible if the two spouses own the business in its entirety. Some spouses may even continue to work in the business together post-divorce.

Split or share

In reference to a jointly held business, you have to work backward and think about how things will wind up down the line. Business and broken hearts don’t mix.

Almost always, it’s going to be better to:
1. buy the other [partner] out and/or split the divisions of the business so it avoids overlap or
2. bring in new management and have a revenue share for one of the spouses. Only in the rare situation where the parties can work seamlessly together does it work in the long run.

Todd Spodek

Todd Spodek

Todd Spodek, Managing Partner at nyccriminalattorneys.com
Tisha Tyler, MBA

Tisha Tyler, MBA

Tisha Tyler, MBA, Certified Professional Coach (CPC) at Tyler Group Coaching & Consulting.

Buy out or run the business together

Unfortunately, marriages don’t always make it. In the case of divorce, one way to divide a couple’s business and its assets is to take into consideration each partner’s role in the creation and day-to-day running of the business. If they can work together, then they should try to do so. If not, then the partner with the most money or time invested should try to buy out the other partner.

Depends on the type of business

The business division depends on the type of business (sole proprietor, partnership, corporation) which defines the owners. In addition to that, one needs to know who actually does the work.

If the business is a sole proprietorship, you can’t split the business or even turn it over to the spouse without creating a new company. If it is a partnership between the two spouses, then it can stay a partnership or be transferred to one spouse. This means it will have to be a new company (sole proprietor) unless it is an LLC. If it is a corporation (taxed as S-corp or C-corp), then the shares can be transferred to the other spouse in any amount without changing the company.

How to divide it financially also depends on many factors. If one spouse is doing all the work and decision making, then it should probably stay with that spouse and just a portion of the profit would be provided to the other spouse as alimony. Changing ownership is likely to cause business issues (disruptions, loss of income, etc.). Dividing a business also implies that the business will be broken up. This could be good (like when GM separated out GMAC — the financial arm — from GM — the car manufacturer) or bad (how do you break up a UPS franchise into two).

Beth Logan, EA

Beth Logan EA, Kozlog Tax Advisers with seven years of experience as a tax professional. (EA is an Enrolled Agent, federally licensed tax professional with full rights to represent taxpayers before the IRS.)

This is a crowdsourced article. Contributors are not necessarily affiliated with this website and their statements do not necessarily reflect the opinion of this website, other people, businesses, or other contributors.

More From Rebecca's Blog
Top 5 Things Narcissists Steal From You

Top 5 Things Narcissists Steal From You

It has been well-established that narcissists are energy vampires and will drain you of everything that you got. In this article, I will be sharing with you the top 5 things that narcissists will steal from you aside from your energy. Coming in hot on number one: Your...

read more
Narcissist Phrases That Contradict Their Behavior

Narcissist Phrases That Contradict Their Behavior

If there's one thing that narcissists are most notorious for, it is their ability to use words as a weapon against vulnerable people. The way they phrase things can contradict their own behavior so much so that it can be hard to differentiate truth from lies. That’s...

read more
Phrases Narcissists Use to Future Fake You

Phrases Narcissists Use to Future Fake You

Are you dealing with a narcissist and they keep making promises that they never keep? In this article, I’m going to show you why this kind of behavior is toxic and share with you some examples of what and how they pull it off. Have you unknowingly been playing the...

read more
Previous
Next
Facebook
Twitter
YouTube
Instagram
{%- if settings.favicon != blank -%} {%- endif -%} {%- unless settings.type_header_font.system? and settings.type_body_font.system? -%} {%- endunless -%} {{ page_title }} {%- if current_tags %} – tagged "{{ current_tags | join: ', ' }}"{% endif -%} {%- if current_page != 1 %} – Page {{ current_page }}{% endif -%} {%- unless page_title contains shop.name %} – {{ shop.name }}{% endunless -%} {% if page_description %} {% endif %} {% render 'meta-tags' %} {{ content_for_header }} {%- liquid assign body_font_bold = settings.type_body_font | font_modify: 'weight', 'bold' assign body_font_italic = settings.type_body_font | font_modify: 'style', 'italic' assign body_font_bold_italic = body_font_bold | font_modify: 'style', 'italic' %} {% style %} {{ settings.type_body_font | font_face: font_display: 'swap' }} {{ body_font_bold | font_face: font_display: 'swap' }} {{ body_font_italic | font_face: font_display: 'swap' }} {{ body_font_bold_italic | font_face: font_display: 'swap' }} {{ settings.type_header_font | font_face: font_display: 'swap' }} :root { --font-body-family: {{ settings.type_body_font.family }}, {{ settings.type_body_font.fallback_families }}; --font-body-style: {{ settings.type_body_font.style }}; --font-body-weight: {{ settings.type_body_font.weight }}; --font-body-weight-bold: {{ settings.type_body_font.weight | plus: 300 | at_most: 1000 }}; --font-heading-family: {{ settings.type_header_font.family }}, {{ settings.type_header_font.fallback_families }}; --font-heading-style: {{ settings.type_header_font.style }}; --font-heading-weight: {{ settings.type_header_font.weight }}; --font-body-scale: {{ settings.body_scale | divided_by: 100.0 }}; --font-heading-scale: {{ settings.heading_scale | times: 1.0 | divided_by: settings.body_scale }}; --color-base-text: {{ settings.colors_text.red }}, {{ settings.colors_text.green }}, {{ settings.colors_text.blue }}; --color-shadow: {{ settings.colors_text.red }}, {{ settings.colors_text.green }}, {{ settings.colors_text.blue }}; --color-base-background-1: {{ settings.colors_background_1.red }}, {{ settings.colors_background_1.green }}, {{ settings.colors_background_1.blue }}; --color-base-background-2: {{ settings.colors_background_2.red }}, {{ settings.colors_background_2.green }}, {{ settings.colors_background_2.blue }}; --color-base-solid-button-labels: {{ settings.colors_solid_button_labels.red }}, {{ settings.colors_solid_button_labels.green }}, {{ settings.colors_solid_button_labels.blue }}; --color-base-outline-button-labels: {{ settings.colors_outline_button_labels.red }}, {{ settings.colors_outline_button_labels.green }}, {{ settings.colors_outline_button_labels.blue }}; --color-base-accent-1: {{ settings.colors_accent_1.red }}, {{ settings.colors_accent_1.green }}, {{ settings.colors_accent_1.blue }}; --color-base-accent-2: {{ settings.colors_accent_2.red }}, {{ settings.colors_accent_2.green }}, {{ settings.colors_accent_2.blue }}; --payment-terms-background-color: {{ settings.colors_background_1 }}; --gradient-base-background-1: {% if settings.gradient_background_1 != blank %}{{ settings.gradient_background_1 }}{% else %}{{ settings.colors_background_1 }}{% endif %}; --gradient-base-background-2: {% if settings.gradient_background_2 != blank %}{{ settings.gradient_background_2 }}{% else %}{{ settings.colors_background_2 }}{% endif %}; --gradient-base-accent-1: {% if settings.gradient_accent_1 != blank %}{{ settings.gradient_accent_1 }}{% else %}{{ settings.colors_accent_1 }}{% endif %}; --gradient-base-accent-2: {% if settings.gradient_accent_2 != blank %}{{ settings.gradient_accent_2 }}{% else %}{{ settings.colors_accent_2 }}{% endif %}; --media-padding: {{ settings.media_padding }}px; --media-border-opacity: {{ settings.media_border_opacity | divided_by: 100.0 }}; --media-border-width: {{ settings.media_border_thickness }}px; --media-radius: {{ settings.media_radius }}px; --media-shadow-opacity: {{ settings.media_shadow_opacity | divided_by: 100.0 }}; --media-shadow-horizontal-offset: {{ settings.media_shadow_horizontal_offset }}px; --media-shadow-vertical-offset: {{ settings.media_shadow_vertical_offset }}px; --media-shadow-blur-radius: {{ settings.media_shadow_blur }}px; --media-shadow-visible: {% if settings.media_shadow_opacity > 0 %}1{% else %}0{% endif %}; --page-width: {{ settings.page_width | divided_by: 10 }}rem; --page-width-margin: {% if settings.page_width == '1600' %}2{% else %}0{% endif %}rem; --product-card-image-padding: {{ settings.card_image_padding | divided_by: 10.0 }}rem; --product-card-corner-radius: {{ settings.card_corner_radius | divided_by: 10.0 }}rem; --product-card-text-alignment: {{ settings.card_text_alignment }}; --product-card-border-width: {{ settings.card_border_thickness | divided_by: 10.0 }}rem; --product-card-border-opacity: {{ settings.card_border_opacity | divided_by: 100.0 }}; --product-card-shadow-opacity: {{ settings.card_shadow_opacity | divided_by: 100.0 }}; --product-card-shadow-visible: {% if settings.card_shadow_opacity > 0 %}1{% else %}0{% endif %}; --product-card-shadow-horizontal-offset: {{ settings.card_shadow_horizontal_offset | divided_by: 10.0 }}rem; --product-card-shadow-vertical-offset: {{ settings.card_shadow_vertical_offset | divided_by: 10.0 }}rem; --product-card-shadow-blur-radius: {{ settings.card_shadow_blur | divided_by: 10.0 }}rem; --collection-card-image-padding: {{ settings.collection_card_image_padding | divided_by: 10.0 }}rem; --collection-card-corner-radius: {{ settings.collection_card_corner_radius | divided_by: 10.0 }}rem; --collection-card-text-alignment: {{ settings.collection_card_text_alignment }}; --collection-card-border-width: {{ settings.collection_card_border_thickness | divided_by: 10.0 }}rem; --collection-card-border-opacity: {{ settings.collection_card_border_opacity | divided_by: 100.0 }}; --collection-card-shadow-opacity: {{ settings.collection_card_shadow_opacity | divided_by: 100.0 }}; --collection-card-shadow-visible: {% if settings.collection_card_shadow_opacity > 0 %}1{% else %}0{% endif %}; --collection-card-shadow-horizontal-offset: {{ settings.collection_card_shadow_horizontal_offset | divided_by: 10.0 }}rem; --collection-card-shadow-vertical-offset: {{ settings.collection_card_shadow_vertical_offset | divided_by: 10.0 }}rem; --collection-card-shadow-blur-radius: {{ settings.collection_card_shadow_blur | divided_by: 10.0 }}rem; --blog-card-image-padding: {{ settings.blog_card_image_padding | divided_by: 10.0 }}rem; --blog-card-corner-radius: {{ settings.blog_card_corner_radius | divided_by: 10.0 }}rem; --blog-card-text-alignment: {{ settings.blog_card_text_alignment }}; --blog-card-border-width: {{ settings.blog_card_border_thickness | divided_by: 10.0 }}rem; --blog-card-border-opacity: {{ settings.blog_card_border_opacity | divided_by: 100.0 }}; --blog-card-shadow-opacity: {{ settings.blog_card_shadow_opacity | divided_by: 100.0 }}; --blog-card-shadow-visible: {% if settings.blog_card_shadow_opacity > 0 %}1{% else %}0{% endif %}; --blog-card-shadow-horizontal-offset: {{ settings.blog_card_shadow_horizontal_offset | divided_by: 10.0 }}rem; --blog-card-shadow-vertical-offset: {{ settings.blog_card_shadow_vertical_offset | divided_by: 10.0 }}rem; --blog-card-shadow-blur-radius: {{ settings.blog_card_shadow_blur | divided_by: 10.0 }}rem; --badge-corner-radius: {{ settings.badge_corner_radius | divided_by: 10.0 }}rem; --popup-border-width: {{ settings.popup_border_thickness }}px; --popup-border-opacity: {{ settings.popup_border_opacity | divided_by: 100.0 }}; --popup-corner-radius: {{ settings.popup_corner_radius }}px; --popup-shadow-opacity: {{ settings.popup_shadow_opacity | divided_by: 100.0 }}; --popup-shadow-horizontal-offset: {{ settings.popup_shadow_horizontal_offset }}px; --popup-shadow-vertical-offset: {{ settings.popup_shadow_vertical_offset }}px; --popup-shadow-blur-radius: {{ settings.popup_shadow_blur }}px; --drawer-border-width: {{ settings.drawer_border_thickness }}px; --drawer-border-opacity: {{ settings.drawer_border_opacity | divided_by: 100.0 }}; --drawer-shadow-opacity: {{ settings.drawer_shadow_opacity | divided_by: 100.0 }}; --drawer-shadow-horizontal-offset: {{ settings.drawer_shadow_horizontal_offset }}px; --drawer-shadow-vertical-offset: {{ settings.drawer_shadow_vertical_offset }}px; --drawer-shadow-blur-radius: {{ settings.drawer_shadow_blur }}px; --spacing-sections-desktop: {{ settings.spacing_sections }}px; --spacing-sections-mobile: {% if settings.spacing_sections < 24 %}{{ settings.spacing_sections }}{% else %}{{ settings.spacing_sections | times: 0.7 | round | at_least: 20 }}{% endif %}px; --grid-desktop-vertical-spacing: {{ settings.spacing_grid_vertical }}px; --grid-desktop-horizontal-spacing: {{ settings.spacing_grid_horizontal }}px; --grid-mobile-vertical-spacing: {{ settings.spacing_grid_vertical | divided_by: 2 }}px; --grid-mobile-horizontal-spacing: {{ settings.spacing_grid_horizontal | divided_by: 2 }}px; --text-boxes-border-opacity: {{ settings.text_boxes_border_opacity | divided_by: 100.0 }}; --text-boxes-border-width: {{ settings.text_boxes_border_thickness }}px; --text-boxes-radius: {{ settings.text_boxes_radius }}px; --text-boxes-shadow-opacity: {{ settings.text_boxes_shadow_opacity | divided_by: 100.0 }}; --text-boxes-shadow-visible: {% if settings.text_boxes_shadow_opacity > 0 %}1{% else %}0{% endif %}; --text-boxes-shadow-horizontal-offset: {{ settings.text_boxes_shadow_horizontal_offset }}px; --text-boxes-shadow-vertical-offset: {{ settings.text_boxes_shadow_vertical_offset }}px; --text-boxes-shadow-blur-radius: {{ settings.text_boxes_shadow_blur }}px; --buttons-radius: {{ settings.buttons_radius }}px; --buttons-radius-outset: {% if settings.buttons_radius > 0 %}{{ settings.buttons_radius | plus: settings.buttons_border_thickness }}{% else %}0{% endif %}px; --buttons-border-width: {% if settings.buttons_border_opacity > 0 %}{{ settings.buttons_border_thickness }}{% else %}0{% endif %}px; --buttons-border-opacity: {{ settings.buttons_border_opacity | divided_by: 100.0 }}; --buttons-shadow-opacity: {{ settings.buttons_shadow_opacity | divided_by: 100.0 }}; --buttons-shadow-visible: {% if settings.buttons_shadow_opacity > 0 %}1{% else %}0{% endif %}; --buttons-shadow-horizontal-offset: {{ settings.buttons_shadow_horizontal_offset }}px; --buttons-shadow-vertical-offset: {{ settings.buttons_shadow_vertical_offset }}px; --buttons-shadow-blur-radius: {{ settings.buttons_shadow_blur }}px; --buttons-border-offset: {% if settings.buttons_radius > 0 or settings.buttons_shadow_opacity > 0 %}0.3{% else %}0{% endif %}px; --inputs-radius: {{ settings.inputs_radius }}px; --inputs-border-width: {{ settings.inputs_border_thickness }}px; --inputs-border-opacity: {{ settings.inputs_border_opacity | divided_by: 100.0 }}; --inputs-shadow-opacity: {{ settings.inputs_shadow_opacity | divided_by: 100.0 }}; --inputs-shadow-horizontal-offset: {{ settings.inputs_shadow_horizontal_offset }}px; --inputs-margin-offset: {% if settings.inputs_shadow_vertical_offset != 0 and settings.inputs_shadow_opacity > 0 %}{{ settings.inputs_shadow_vertical_offset | abs }}{% else %}0{% endif %}px; --inputs-shadow-vertical-offset: {{ settings.inputs_shadow_vertical_offset }}px; --inputs-shadow-blur-radius: {{ settings.inputs_shadow_blur }}px; --inputs-radius-outset: {% if settings.inputs_radius > 0 %}{{ settings.inputs_radius | plus: settings.inputs_border_thickness }}{% else %}0{% endif %}px; --variant-pills-radius: {{ settings.variant_pills_radius }}px; --variant-pills-border-width: {{ settings.variant_pills_border_thickness }}px; --variant-pills-border-opacity: {{ settings.variant_pills_border_opacity | divided_by: 100.0 }}; --variant-pills-shadow-opacity: {{ settings.variant_pills_shadow_opacity | divided_by: 100.0 }}; --variant-pills-shadow-horizontal-offset: {{ settings.variant_pills_shadow_horizontal_offset }}px; --variant-pills-shadow-vertical-offset: {{ settings.variant_pills_shadow_vertical_offset }}px; --variant-pills-shadow-blur-radius: {{ settings.variant_pills_shadow_blur }}px; } *, *::before, *::after { box-sizing: inherit; } html { box-sizing: border-box; font-size: calc(var(--font-body-scale) * 62.5%); height: 100%; } body { display: grid; grid-template-rows: auto auto 1fr auto; grid-template-columns: 100%; min-height: 100%; margin: 0; font-size: 1.5rem; letter-spacing: 0.06rem; line-height: calc(1 + 0.8 / var(--font-body-scale)); font-family: var(--font-body-family); font-style: var(--font-body-style); font-weight: var(--font-body-weight); } @media screen and (min-width: 750px) { body { font-size: 1.6rem; } } {% endstyle %} {{ 'base.css' | asset_url | stylesheet_tag }} {%- unless settings.type_body_font.system? -%} {%- endunless -%} {%- unless settings.type_header_font.system? -%} {%- endunless -%} {%- if settings.predictive_search_enabled -%} {%- endif -%} {{ "accessibility.skip_to_text" | t }} {%- if settings.cart_type == 'drawer' -%} {%- render 'cart-drawer' -%} {%- endif -%} {% sections 'header-group' %}
{{ content_for_layout }}
{% sections 'footer-group' %} {%- if settings.predictive_search_enabled -%} {%- endif -%}