Divorce with a Business: How Is It Impacted?
August 7, 2023

Divorce is a complex and emotional process that can impact various aspects of a person’s life, including their business. When a business is involved in a divorce, it can complicate matters and require careful consideration and planning.

Understanding How Businesses are Impacted by Divorce

1. Ownership Structure

Determining the ownership structure is the first step in understanding how a divorce impacts a business. If one spouse solely owns the business, it may be considered separate property and not subject to division in a divorce. However, if both spouses have an ownership interest in the business, it may be considered marital property and subject to division. In other circumstances, even if only one spouse “owns” the business, all or only part of the business may be considered marital and subject to division.

2. Value

If the business is subject to division, the next step is to determine its marital value. This complex process involves valuing assets, assessing debts and liabilities, and analyzing the business’s overall financial health. It may require the involvement of financial experts or a business valuator to ensure an accurate and fair valuation.

3. Division

Once the value of the business is determined, the next step is to decide how it will be divided. There are several options available, including selling the business and dividing the proceeds, dividing the ownership interests between the spouses, or one spouse buying out the other’s ownership interest.

However, dividing a business can be complicated, mainly if it is a closely held or family-owned business. In these cases, the emotional and personal ties to the business can make it difficult to make objective decisions about its division.

4. Ongoing Operations

Another vital factor to consider is how the divorce will impact the ongoing operations of the business. If both spouses are involved in the business, it may be challenging to continue working together after the divorce. This can lead to conflicts and disputes that harm the business’s profitability, reputation, and long-term viability.

It is essential to ensure the business’s ongoing success, including creating a plan for management and ownership succession, identifying potential risks or challenges, and establishing clear lines of communication between all parties.

In some cases, it may be necessary to involve legal and financial professionals to assist with the process of dividing a business in a divorce. These professionals can provide valuable guidance and support, helping ensure the process is fair and equitable.

Work with a Divorce Attorney in Harrisburg, PA

Divorce can significantly impact a business, particularly if both spouses have an ownership interest. Therefore, it’s essential to take a careful and strategic approach, working with legal and financial professionals to ensure the business is valued and divided fairly. It is also important to consider the ongoing operations and take steps to ensure the long-term success of the business. When considering divorce when there is a business involved, it may be a good idea to consider the Collaborative Divorce process as it involves more flexibility than traditional litigation and can involve significant involvement from neutral third parties who are experts in finances and/or property division.

While the emotions involved in a divorce can make it challenging to navigate these issues, taking a proactive and thoughtful approach can help both parties achieve a positive outcome and move forward with their lives.

If you need professional guidance, reach out to the divorce attorneys at Daley Zucker today.

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