Kline Legal Group P.L.C.

A Family-Owned Business Can Significantly Complicate a Divorce

While many divorces are resolved amicably, this doesn't mean that they cannot become complicated. When a couple with a high net worth undergoes a divorce, it can be a challenge to divide the assets. There are multiple investment portfolios, property that resides in different states, and numerous other high-value items. This process becomes even more complicated if the couple owns a business together.

Chances are, this business has become successful, meaning that the business encompasses a significant amount of the couple's assets. If this is the case, dividing the business between the two spouses can be a significant challenge. 

There are Several Choices the Couple can Make

Dividing the business between two divorcing people ultimately depends on what the couple decides to do. There are a few options on the table.

Close the Business: This is the first option that people can choose. While this isn't always ideal, especially if the couple turned the business into their life's work, this is the most straightforward option. Closing the business liquidates the business's assets. Then, the assets can be divided evenly just as the other financial interests.

Move the Ownership Into the Hands of One Spouse: This is another option. This is still relatively straightforward; however, one member will have to buy out the other member. Then, the business is in one person's hands while the other person collects their financial earnings from the business.

Maintain Dual Ownership of the Business: This doesn't have any of the logistical challenges but the couple will have to find some common ground in order to keep the business up and running. In this scenario, the couple may decide to lay out a post-divorce business agreement that states how the business will be run. This becomes even more challenging if the two parties have different visions for what will happen to the business in the future.

Dividing the Interest Doesn't Mean Equal Division

Many people assume that the assets of the business are going to be split down the middle; however, this is usually a little more complicated than that. For example, if one person put in more money than the other person, they would expect a larger piece of the business.

In addition, some people may have different valuations of the business. This is why an expert is required to place an objective value of the business. One person may try to hide certain assets of the business to increase the share of the business that they would receive in return.

This is why anyone going through a divorce affected by a family business will benefit from contacting an experienced attorney. A family law attorney understands how to resolve a high-asset divorce as smoothly and as fairly as is possible under the circumstances. 

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