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What happens when the business partners divorce?

by | Jul 30, 2021 | Divorce |

Business partnerships and marriages have a lot of similarities, but they remain separated by the line between work and personal life. However, when a business partnership is between spouses, that line is gone, and it can lead to work pressures affecting the home life. When married business partners get a divorce, the court may order the business liquidated, they could continue to work together or the business could end up with just one of the owners.

The sale of the business

As Texas is a community property state, if the couple started the business during the marriage, both parties would have an equal share of the business’s debts and assets. The quickest and easiest way to equally divide this would be through total liquidation. However, that would generally mean closing the business altogether, which is likely the last thing either spouse would want.

Continued partnership

In rare instances, it’s possible that divorced couples can continue to work together. This requires a somewhat less contentious divorce process, but if the duties and ownership of the company can be divided along equal lines, this is a possibility.

It can be challenging to continue working with an ex, but it is possible. Exes often must continue coordinating when it comes to childcare, so a business run by ex-spouses is simply using similar skills differently.

The buy-out

This would be when one side in the divorce takes sole possession of the business. This might not actually be part of a “buy-out” situation and could be a part of the property division process.

These issues apply to more than just business partners

Even if your spouse is not a part of the business, they will likely have a claim to a portion of the business’s assets. Whatever the circumstances, business valuation and asset division are among the most complicated issues in divorce.