Ending your marriage becomes even more complex when you own a successful business with your spouse. Careful preparation can ensure you maintain operations throughout the divorce process.
Maryland law allows you to consider various options to fairly divide the business.
Equitable distribution laws
The state follows equitable distribution principles. That means couples must divide marital property fairly but not necessarily equally.
Both spouses should understand how this concept applies to the business. For example, if one spouse wants to become the co-owner, they must buy out their partner at fair market value.
Professional business valuation
First, you need a professional assessment to determine the value of the jointly-owned business. A precise market valuation ensures equitable distribution.
Debts incurred by the business are part of the equation. Determining responsibility for the company’s financial obligations will affect the overall divorce settlement.
Ownership options
The structure of the business plays a role in the divorce proceedings. Whether you have a partnership, LLC or corporation impacts your available options for division. You may also have an operating agreement that details the fate of the business in a divorce.
Couples need to explore whether one spouse can afford to buy out the other’s share in the business. Alternatively, you may choose to continue co-owning the business post-divorce. A well-drafted agreement can help protect your interests if you go this route.
Continuing operations
If you decide to maintain the business, take steps to ensure it runs smoothly during and after the divorce process. Have an honest discussion with your spouse about roles, responsibilities and decisions during this time of transition.
About 99.5% of Maryland’s companies, more than 618,000 enterprises, qualify as small businesses. Successfully splitting a successful business requires thoughtful strategic planning. Considering these factors can help put you on the path to an amicable resolution.
