How can I pay off my spouse to keep the family business in a divorce?

How can I pay off my spouse to keep the family business in a divorce?

| Jun 23, 2021 | Divorce

If you own a business, a divorce can have devastating effects on it. Co-owning a business with your spouse makes that business a marital asset, which means the court can divide it between you.

Obviously, division of your business could mean having to sell it to split the profits, but that is not your only option. INC explains you can also pay off your spouse to keep your business.

The payoff

Typically, in a divorce, when you want to keep an asset, you will need to give up an asset or assets of equal value. For example, if you want a vehicle, then you could agree to your spouse having the other vehicle. That would be an “even” trade. Do note it may not always be completely equal in value, but the perceived value should be equal.

In the case of a business, your spouse may ask for specific things in exchange for his or her part in the business. Even if these things do not equal the same value of the business, you can still make the deal.

The plan

You will want to have some plan in mind on how you will pay off your spouse. Usually, this begins by getting your spouse to agree he or she does not want the business. If your spouse wants to keep ownership of the business, then a payoff will not work.

However, if your spouse is on board with the payoff, then you will need to think about what you will give in exchange for the business. Examples may include cash, stock and real estate. You also could create a settlement that involves a long-term payout where you make payments to your spouse over a period of time equal to the settlement amount.

In the end, a payoff for your business can be incredibly beneficial because it allows you to keep the business after the divorce.