The next issue is how to cover the expense of buying out your spouse’s interest. You may need to liquidate some assets to buy their interest or perhaps trade assets. For this, you want to make certain you have the assistance of the necessary legal, tax, and financial advisers to prevent mistakes and ensure you understand all of your costs for this transaction.
In some situations, a clean break may be necessary, and you may have to simply sell the entire business and divide the resulting sale price. This may be the simplest solution or could be problematic, depending on the type of business.
For instance, if you own a restaurant, the ease of the sale may depend on the type of restaurant. If it is a franchise, where you both put in a great deal of time, but your effort is not unique and could be done by another paid employee, you may be able to sell the entire operation as a going concern.
Of course, with a franchise, there may be very specific requirements controlling the sale of the operation, and again legal advice early in the process may be necessary to prevent expensive mistakes from occurring.
If the restaurant is strongly associated with either spouse, as in the case of one being a chef or otherwise tied to the persona of the restaurant, it may be more difficult to sell as a going concern, and one spouse buying out the other may be the better option.
This negotiation and these transactions can be very complex, and seeking profession legal and financial advice is essential to making this all work out in the end.
Source: forbes.com, “How To Handle Divorce In A Family Business,” Lora Murphy, March 7, 2016
