Ohio is home to an astonishing number of small businesses – more than 949,000, according to the latest figures from the Small Business Administration. That means there are a significant number of business owners here in the state as well.
So what happens to a small business that is considered marital property when the owner goes through a divorce? There are a few possible outcomes.
1. One spouse takes the entire thing
If one spouse has been more involved in the business, and the other has little interest in being part of it going forward, it often makes sense to find the disinterested party an exit. That might entail:
- Buying out a spouse’s shares with one lump sum
- Negotiating a settlement note, where one spouse is paid off over time
- Using other marital property of equal value to find a resolution
This is generally the most common outcome. But what if it doesn’t make sense for your situation?
2. Sell the business, split the profits
If neither spouse wants to run the business once the marriage is over, they can consider selling it. Once the transaction goes through, the separating couple can split the income based on their interest in the business.
There is a potential downside to this: It can take quite a long time to find a buyer, and during that stretch, you’ll need to keep operating the business. It also requires spouses to work together toward a satisfactory agreement.
3. Continue to co-own the business
Some couples separate amicably, and have no trouble continuing a family business with their former partner. In these cases, they may choose to remain involved in the operation for the foreseeable future.
This might mean continuing to work together in the same roles as before. However, it may be possible to come to a different arrangement. One spouse could retain managerial duties, for example, while the other steps back but continues to receive a share of profits for a period of time.
Divorce is rarely simple. Business owners with valuable, complex assets have even more to consider. There is a way forward, however, and it will usually resemble one of the three general outcomes explained above.