Three ways to handle a family business during a divorce

This article looks at three strategies for handling the family business during and after a divorce.

There are quite a few joint business owners across both Texas and the United States who are also married to each other. In fact, according to CBS News, about 3.7 million businesses across the U.S. are jointly owned by husband and wife teams. The sad fact, however, is that many of those partnerships will eventually end in divorce and when that happens the family business will often be subject to division just like the rest of the couple's marital property. Below is a look at three options business owners who are divorcing have when determining the future of their business.

First option: The buyout

This is probably the easiest and most common option. With the buyout one spouse simply buys out the other spouse's share in the business. This option makes a lot of sense if the business is built up around one spouse's professional expertise. For example, if the business is a dentistry office and one spouse is the dentist while the other spouse does mainly administrative work, then it would make sense for the spouse who is the dentist to buy out the other spouse.

Second option: Selling the business

In other cases, it may make more sense to simply sell the business entirely and then split the profits between both spouses. This option allows both spouses to make more of a "clean break" from their marriage, which may be essential to help them get back on their feet sooner after the divorce. However, it also means that both spouses could find themselves out of a job or having to rebuild a new business from scratch. Furthermore, disputes can arise between the spouses about what is a fair selling price.

Third option: Remain business partners

As MarketWatch reports, remaining as business partners even after both spouses have divorced one another is both the simplest and, for many, the most difficult option. Simple because it avoids disputes over business valuation from arising and keeps the business from getting sold off. But the most difficult option because, obviously, if a couple's marriage has broken down then there is very little reason to expect that they will be able to continue on as business partners. However, this may be a viable short-term option in some cases, such as if both spouses are willing to wait a little longer for a more attractive offer from a buyer before selling the business entirely.

Family law and asset division

As a community property state, property division in Texas works a little differently than it does in much of the rest of the country. That's why anybody going through a divorce should contact a family law attorney for help. The decisions made during the divorce, particularly in regards to asset division, could have major financial repercussions for years in the future, which is why it is so important that they be handled properly and with care .