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Who keeps the family business after a divorce?

On Behalf of | Mar 20, 2019 | Divorce, Firm News |

Starting a business alone can be fun, but it is not for everyone. Some entrepreneurs in Massachusetts prefer to work with a partner, and for some people the obvious choice is their spouse. This can be a fun experience for married couples while also helping them generate a steady and regular income stream. However, things can get complicated during divorce.

Dividing a business during property division can be a little more involved than deciding who keeps the furniture. The first step should be to have the property accurately valued. It is usually best to have an impartial third party perform this action to avoid any bias from either owner.

The first and most common option is for one person to keep the business and continue running it. This generally involves the person staying on buying the ex-spouse out of his or her interest in the business. This is also an effective choice in terms of taxes as the transfer of the business is considered incident to divorce, which means it is not taxable. Buying one person out of the business also highlights the importance of having an accurate value.

For ex-spouses who work well together in business but not so well in marriage, it might be possible for both to keep the business. This option is not suited for everyone, though. Working with an ex-spouse can be too much for some people, while others find it difficult to collaborate with someone they recently divorced.

The final option is to simply the business and split any of the resulting profits. Again, it is extremely important to have an accurate value for not just this option, but for moving forward with any decisions regarding a family business during divorce. Sorting through the complicated nature of Massachusetts family law while also owning a business can be complicated, but an experienced attorney can generally provide valuable insight on the matter.