People preparing for divorce typically have a lot of important questions they need to answer. They need to understand the basics of the law and learn about what to expect. As the situation becomes more complex, the questions that people need to answer can become more challenging as well.
High-value resources can easily complicate divorce proceedings and can make the entire process far less predictable. Maybe one spouse started a professional practice after completing their degree. Perhaps the spouses invested jointly in a franchise business opportunity.
When the marital estate includes a business or professional practice, the entire divorce process could become far more complex. People preparing for divorce as business owners may need to ask themselves the three questions below to better protect themselves and their resources.
Who should run the business in the future?
In some cases, only one spouse has the experience or degree necessary to actually run the business. If a tax accountant started a professional practice, their spouse may not be able to operate the business without their services or the work of a similarly-credentialed professional. Other times, such as when spouses operate a franchise restaurant together, either spouse could run the business after the divorce. The spouses could even continue to operate it together. Deciding who should maintain control of the company is one of the most important decisions to make when preparing for divorce.
What is the business worth?
Whether the spouses intend to sell the company and split the proceeds or aim to allow one spouse to continue running the business, they need to know the fair market value of the organization. Many times, spouses need the help of outside professionals when conducting a business valuation. Simply choosing the valuation method to use can be difficult, to say nothing of the challenges of actually crunching the numbers to establish a reasonable figure. Spouses typically need to know what a business is worth in order to integrate its value into decisions related to the division of other assets and marital debts.
Can the spouses keep working together?
Sometimes, both spouses have worked at the business for years. They may have an excellent system in place to keep the company profitable without taking on numerous support professionals. It is sometimes feasible for spouses to continue running or even owning a business jointly after divorce. Those who intend to approach the matter cooperatively may need to draft clear contracts to protect the company against future disputes and ensure that they remain aligned on key issues regarding co-ownership or continued employment.
Understanding that business ownership is often a major complication during divorce proceedings can help people better prepare for the process ahead. Business owners have many unique property division issues to address if they want to preserve their resources during and after a divorce.