“Paying Off” a Spouse for Business Interests in a Divorce
If you are a business owner going through divorce and you have shared business interests with your spouse, the process of untangling those interests and preserving your business can become rather messy. It’s a good idea to have a prenuptial agreement or other agreements in place that protect your business interests long before a divorce becomes a possibility. But in some circumstances, you may get to the point where you have little recourse other than to pay off your spouse for their business interests so you can continue to operate it as the sole owner moving forward.
If your spouse is entitled to any ownership interest in the business, they will need to be compensated for that interest somehow. Here are a few ways you can do this, assuming you don’t want to continue running a business together after your divorce:
- Use a property settlement note, a type of long-term payout to your ex for the value of their share of the business, usually with interest added
- Use your share of the marital assets to immediately pay off the business interest (may not be a feasible option depending on the value of their share of the business and the amount of assets to which you are entitled)
- Sell off the business and divide the price of the sale
Obviously you will want to avoid the third option if your goal is to remain in business, but if you cannot come to an agreement or if you simply cannot afford to buy out your ex, then this may be your only option to make sure you both come out ahead financially.
For more information about how to deal with business interests in a divorce, contact an experienced Long Island divorce attorney at Bryan L. Salamone & Associates.