Running a family business is time-consuming and stressful. Your family restaurant or landscaping business may have survived some lean times when you first launched it and during economic downturns. You may have worked long hours to help it succeed. Now, you are facing a divorce and are worried: How will your divorce impact your family business?
Marital assets and property division in divorce
In Ohio, marital assets are split between divorcing spouses in a fair, equitable manner. If you founded your business after your marriage, you likely will split some of its assets in your divorce. If you started your business before marriage, but you and your wife both have worked to help it succeed and used joint money to help it grow, your wife likely will receive some of the business assets.
How much your spouse receives of your family business assets will depend on many factors:
- How long you have been married
- How much your spouse contributed to the business (did your wife work for the business too?)
- If you paid yourself a standard wage while running your business (if you didn’t, your wife could argue that your family suffered and she should receive more of your assets in divorce)
Your business assets may be separate property if you established your business with money of your own, before you married, and your spouse signed a prenuptial agreement protecting your business assets in case of divorce.
How to split assets of a family business
When couples divorce and split assets of a family business, they usually approach that in one of these three ways:
- One spouse buys the other out of their share of the divided business assets.
- The divorcing spouses decide to continue to co-own the business together.
- The divorcing spouses decide to sell the business and split the profits.
If a divorcing couple decides to sell the family business, or one spouse wants to buy out the other, they will need to have a business valuation completed. The business valuation will determine what the business is worth. Then, if one spouse buys the other out, they will have to either secure a loan to buy out the other spouse or give the other spouse a greater share of other marital assets (maybe the family home and more in retirement savings).
If you own a family business and are facing divorce, you should consult an experienced divorce attorney. An attorney can help determine what your marital assets are and how much of your family business’ assets your spouse could receive in a divorce.