Discreet Family Law Representation

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Could I sell my business before divorce?

On Behalf of | May 25, 2021 | High-Asset Divorce

If you own your own business and divorce is looming ahead, you will have tough choices to make. Some entrepreneurs want to hold on to a business through a divorce. However, you might want to sell your operation to reap a profit to help build your post-divorce life. You want to be careful when you decide to sell your business, though.

The complications of divorce might not allow you to sell your business before the divorce commences or reaches its conclusion. Chron explains some obstacles that could hold you back from a quick sale.

Your business as separate property

Some couples own a business together. If they divorce, they must decide whether to keep running the business, or if one spouse will leave the business, or whether to sell the business off. Regardless, since both spouses own value in the business, a divorcing spouse will have an entitlement to a share of it.

Your business might be different. You may have created the business before you married and have never brought your spouse on board as an owner or a decision-maker. If your business is separate property, you should have no problems selling it before your divorce. Still, even if your spouse has never held a leadership role in your company, it does not mean a court won’t find that your spouse has some entitlement to your business value.

The possible contributions of your spouse

There are different ways your spouse may have contributed in some fashion to your business. Perhaps your spouse was an employee at one time. Your spouse may have contributed materials or labor to your business. Part of your business may count as marital property if you have at any point commingled your marital finances with your business assets.

These questions will inform when you can sell your business. A court might find your spouse only has an entitlement to a small share of your operation. It might not be a problem to buy out your spouse’s share. From there, you will probably be free to sell your business as you wish.