Can Divorcing Spouses Remain Co-Owners of a Business After Divorce?
Divorce under any circumstances is difficult for most couples. However, divorcing couples who are joint owners of a business face special challenges.
Dividing marital assets, including a family business, can lead to disagreements over whether to close or sell the business, the value of the business, the division of the company’s assets, and the future management of the business. These disagreements can add tension and stress to an already difficult time.
However, despite challenging circumstances, you can remain co-owners of a business with your spouse after a divorce if you so choose. Many divorcing spouses agree that it would be in their best financial interests to keep their jointly owned business afloat.
The divorce attorneys at Halligan LLC understand the personal turmoil involved when undergoing a divorce. It is our goal to help our clients navigate a difficult time, and to obtain the best possible results. We will help you navigate a path to a successful resolution, which can include keeping your share of the business you co-own with your spouse.
Call the attorneys at Halligan LLC, to discuss your divorce case now. We can be reached at (720) 608-2361. We will explain your legal rights in Denver, Colorado when undergoing a divorce and answer any questions you may have about moving forward with your business plans.
Problems Couples May Face Continuing with a Co-Owned Business After Divorce
The U.S. Census Bureau estimated that there were approximately 3.7 million couples who jointly owned businesses together as of 2007. That number has most likely only increased over the last decade.
During happy times, many spouses make good business partners, and couples often can build successful businesses together. Couples often understand each other’s strengths and weaknesses. They also trust each other when they have to make important business and financial decisions. Also, each spouse will both put in the effort necessary for the business to succeed for the sake of their family.
Even after building a business together, sadly, marriages still fail. When the marriage breaks down, many couples will struggle with decisions about the co-owned business. One spouse may believe that they can no longer have any personal relationship with their significant other and will want to sever all ties and buy out, or sell to, their spouse.
Divorced couples may, at first, lose trust in each other. In essence, they may wonder, if they cannot make their marriage work, how will they ever make their business work?
However, with the right mindset, and detailed help from legal professionals, many divorcing couples who co-own a business are able to continue their business venture together after the divorce is finalized.
Should Divorcing Spouses Work Together?
Every divorcing couple who jointly owns and runs a business will debate whether they should continue running the business together. Despite the challenges, divorcing spouses can continue with their shared business interests if both of them come to an agreement to do so, and if they work together towards that common goal.
To succeed in business after a divorce, spouses should take certain steps moving forward. First, each spouse should make the decision early on to treat each other with respect and professionalism for the sake of the business, despite their personal feelings.
It is also recommended that divorcing spouses come to a written agreement regarding their roles in the business moving forward, and what rights each party will have if one decides to sell their share in the business at a later point in time.
A written contract can formalize the business relationship and give each spouse peace of mind moving forward.
Frequently Asked Questions
Is it necessary to have a “corporate prenup” drafted?
Yes. You should seek assistance from your divorce attorney to have your agreement regarding the potential future sale of your business interest to your ex-spouse incorporated into the terms of your divorce. Without this document, any sale of your business interest to your ex-spouse after the divorce is finalized will be subject to a tax penalty by the IRS.
Will I be taxed if I ultimately decide to transfer my business interests to my spouse in the divorce decree?
No. Pursuant to section 1041 of the Internal Revenue Service Code, a transfer between spouses or former spouses incident to divorce is generally not taxable.
Halligan LLC to Can Help You Continue Your Business with Your Spouse After Divorce
Protect your financial future in the face of divorce. If you co-own a business with your spouse and are undergoing a divorce, you don’t have to give up everything you worked so hard for. A divorce can have a huge impact on a family business, and given the multiple factors in play, these cases can be extremely complex. But they can be navigated skillfully and professionally, and have positive results.
Contact the divorce specialist at Halligan, LLC, to learn how you can divorce your spouse, and also successfully continue with your shared business venture.
Our attorneys can be reached at (720) 608-2361.