Burke Levy, P.C.

When your business partner becomes your ex-spouse

Divorce affects every area of your life and often the lives of your families, friends and co-workers. This may be especially true if you and your spouse own a business together. In addition to the usual questions of asset division and child custody to resolve, you have the added complication of determining what to do with the business.

If your Massachusetts business has been your livelihood, its continued success may be important to your future financial security, so its fate during your divorce is critical. However, you and your spouse may not agree about how to fairly deal with the business as a marital asset. There are numerous options to consider.

Dividing a business

No matter which path you choose to take, the first step may be to obtain an independent appraisal of the business. This will not be an inexpensive undertaking, but it will give you a clearer idea of how much leverage the business holds in any negotiating you do with your spouse. With a clearer understanding of the value of your business, you can decide which option works best for you among these:

  • You buy out your spouse's share of the business by extending payments over several years with or without interest.
  • You trade other assets, such as the house or investments, for your spouse's share in the business.
  • You allow your spouse to buy out or trade for your share, and you use the proceeds to start a new company.
  • You and your spouse work out an agreement to continue running the business as partners.

The last option will require significant legal work and perhaps personal sacrifices to remain professional on the job. It will be crucial to outline your separate roles in the business and perhaps draft a partnership contract that includes contingencies in case the arrangement does not work out. In fact, you may use this option as a way to give yourselves more time to decide on a long-term plan for the business.

It may seem that the best solution for everyone involved is to sell the business and split the proceeds. However, this is not always easy and often extends beyond the finalization of your divorce. If you and your spouse decide to sell, you will need an advocate who will ensure you obtain your fair share after taxes, debts and other legal issues are settled.

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Westborough, MA 01581

Phone: 978-728-9446
Fax: 978-537-2828
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Leominster, MA 01453

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