The U.S. Census Bureau’s data indicates that somewhere in the neighborhood of 3.7 million business across the nation are owned by a husband and wife together. Those couples here in Utah who are part of that statistic most likely understand all too well that when the marriage is working, the business usually is as well. However, when a couple decides to divorce, the fate of the business is uncertain.
What happens to the business during and after the divorce could largely depend on each partner’s role in the company. For example, if both parties are doctors, the business might need to be divided. However, if one party is a doctor and the other is the office manager, the business may continue since a new office manager can be hired.
In any event, the value of the business needs to be determined as part of the proceedings. If one person is going to keep the business, the other party may be bought out. Once a value is agreed upon, the parties can negotiate how the buyout will be paid. Often, marital assets are used to make up part, or all, of the value. If enough marital assets are not available, the parties can work out a payment plan for the remaining balance.
However a Utah couples decides to deal with the family business, agreeing on its value is sometimes a point of contention. For this reason, it is essential that an independent, third-party valuation be done in order to ensure that any settlement is fair and equitable to both parties. Of course, the parties might decide to continue working together after the divorce, depending on their individual circumstances, which will require some adjustments to the business structure. Any agreement the parties come to will then need to be made part of the divorce settlement.
Source: CBS News, “Who holds onto the family business when couples divorce?“, S.Z. Berg, Feb. 10, 2015
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