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Colgan Law Firm LLC
Serving Wyandotte, Leavenworth, Johnson Counties in Kansas and Beyond

Divorce and family businesses

People in Kansas who get a divorce may discover that finding a way to divide family assets in a way that satisfies everyone can be difficult and draw out the divorce process. If one of those assets is a family business, they may find that the problem is compounded.

Having to divide a family business introduces a number of new challenges to a process that is already complicated. In order the find the best way forward, both parties should examine their motivations for remaining involved in the business; they need to be committed to determining how to best divide it.

Obtaining a formal appraisal of the business from an objective third party should be the first step in determining how much the business is worth. Divorcing couples will then be able to consider their options for how to divide the business.

One option to consider, and one that is frequently chosen among divorce couples, is letting one spouse assume total ownership of the business. Using the appraised value as a basis, one spouse would purchase the ownership interest of the other spouse. Consolidation of business ownership in this manner is typically tax-efficient as purchasing business shares directly is categorized as a transfer of property related to a divorce, a transaction which is usually not taxable.

A family law attorney may assist clients with obtaining the desired settlement terms regarding a range of divorce legal issues, including the division of property. For assets that may require complex division like a family business, the attorney may consult outside professionals, such as appraisers, to determine the proper value of the asset. Depending on how involved a client wants to remain in the business, the attorney may then negotiate with the opposing party regarding the purchasing of ownership interest.

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