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What may happen to a business in a divorce

On Behalf of | May 20, 2019 | Divorce

Kansas couples who own a business together must decide what to do with the business if they get a divorce. Some couples are able to continue running the business even if they do not have an amicable relationship although this can make it much more difficult. They may need to find a way to restructure the business to minimize their contact with one another.

One spouse could buy out the other, but this may not be possible if both spouses are equally critical to the success of the business. If they do agree on this course of action, they should have the business appraised first. However, the spouse who is keeping the company might not have enough cash flow to purchase it outright. An alternative could be a payment plan. Selling the business may be necessary if this is not financially feasible.

A couple who wants to sell the business should agree on terms and a minimum price. While they may hope to maximize profits, that might be unrealistic. They may need to sell sooner than would be ideal. Both spouses should attempt to make a decision that takes into account what is best for the business, the employees and themselves. People may feel bitter about the divorce, but they should avoid making decisions out of spite.

If only one person owns the business, the other spouse may still be able to claim a portion of the business in the divorce. Kansas is an equitable distribution state, so the process of figuring out how much a spouse might be owed could be complex. However, one thing a court might consider is whether a spouse’s support contributed to the success of the business even if the spouse did not work there directly. Homes, retirement accounts and valuable collections might also present challenges in property division.