We have noted many times that when considering whether simple, no-fault, uncontested divorce is right for you, it is up to the couple to sensibly and maturely resolve the usual issues regarding what they own and, when not alrerady resolved, children. In rare cases, settling the assets of a family business may be a concern.

The Small Business Administration notes that 90% of all businesses in the United States are family owned. They often get started, as do marriages, with the best of intentions, and with little notion of divorce anywhere on the horizon.

Over time, all the parties in a family business invest a lot of time, energy and - perhaps most importantly - their very selves, into making it work. If divorce does come to be considered, the business may be the most valuable asset of the marriage. And yet, it may be the one most difficult to divide.

How do you split the baby? Presuming no prenuptial agreement is in place, the options at hand might be closing up shop completely or selling to a third party and splitting the proceeds equally. That can be difficult, with all the emotional capital invested in a small business.

To avoid this dilemma, especially in an uncontested divorce, a couple in a family business has to have as clear exit strategy. And it should include:

  • Be rational and consider compromise. Know what the business means to you economically and emotionally, and keep business matters separate from personal disputes.
  • Hire an independent business appraiser. This could be particularly helpful if the the couple don't share joint ownership of the business.
  • Know the local law. There is "enterprise goodwill" and there is "personal goodwill" and both need to be considered to reach a fair settlement. Know what state law says.
  • Think about role transition. It may be that ex-spouses will choose to continue working together in the business. If so, separation from old roles may be crucial to be avoid future disputes. Be realistic about whether or not such a model will work.
  • Be transparent. Wait to make any changes to the business until after the divorce is final. Doing anything beforehand could result in a court battle.

Source: Forbes, "Divorce doesn't have to kill your family business," Charley Moore, Sept. 2, 2011