Ohio couples contemplating divorce have a special set of circumstances to deal with when they own a business together. As Forbes explains, there are three choices as follows:
- Continuation of joint ownership
- Buy-out of one spouse by the other
- Sale of the business
Each solution has its own advantages and disadvantages. Each divorce situation is different and each couple must decide which solution works best for them.
Continuation of joint ownership
If the spouses believe they can maintain a professional business relationship after their marital relationship ends, continuing to own and operate the business together can be the best option. One of the biggest advantages is that each spouse maintains his or her own share of the business and there is no need to go through the often expensive process of getting a business valuation.
However, a possible downside to continued joint ownership is that the spouses will be required to have continued close contact with each other after the divorce and will need to trust each other when it comes to business decisions. The QuickBooks Resource Center suggests that a written agreement be drawn up setting forth the specific business responsibilities and duties of each spouse.
Buy-out of one spouse by the other
For one spouse to buy out the other, the value of the business must be assessed. This generally requires hiring a business broker, CPA or appraiser who can objectively determine the value of the business as a whole and the value of the respective share of each spouse, which may or may not be equal. In a buy-out situation, it is virtually impossible for the spouses themselves to determine the true value of the business since their financial interests are opposed. However, they must decide whether the buy-out will be a straight financial transaction or whether other marital assets will be used as part or all of the buy-out price.
Sale of the business
As with a buy-out, a professional business value assessment must be made before the business can be sold. The main downside of this option is that if the business remains on the market for several months or longer, the ex-spouses must continue running the business together during the interim.