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What will happen to a business during a divorce?

On Behalf of | Mar 10, 2021 | Divorce

Divorce is not an easy process for people in North Carolina. The couple had been sharing one life throughout the marriage. This includes sharing a home, finances, often times have the same health insurance, car insurance and also live together with their children. This will all change when people divorce. They will have their own homes, insurance, separate their finances and divide their assets as well. This can be a complicated process while people are dealing with the emotions of the divorce.

Some parts of the process are easier than others though. Also, the complications of each part of the process can vary from divorce to divorce. How complicated the process will be depends on the circumstances of the marriage. The complication of asset division depends on the type and the amount of the assets the couple owns. One type of asset that can be particularly complicated to divide is a business that one or both spouses own.

Options for dividing businesses

The first step in dividing a business is determining the value of the business. This can be difficult for privately owned business and will most likely require a business appraisal or potentially two business appraisals if there are disagreements over the value of the property. After the value is determine the couple can then work through dividing the business. There are a few different options for dividing the divorce.

  • Buying out one spouse – This means that if the business was valued at $500,000, then one spouse would pay the other $250,00 to buy their interest in the business. How this is paid can vary though as many people do not have that much cash available at one time and they may pay them off over time.
  • Sell the business – If it does not make sense for one spouse to continue the business on their own, the couple may sell it and split the proceeds.
  • Remain Co-owners – The couple could also continue to run the business together. Some couples are good business partners even if the marriage fails. If both rely on the income for the business and they can work well together, this is an option.

Many couples own businesses in North Carolina. People may not think about it as an asset, but it is an asset that must be divided like other assets the couple owns. This is a unique asset though and the division process can be complicated. Experienced attorneys understand the process though and may be able to guide one through it.