How Is a Family Business Handled During an Ohio Divorce?

 Posted on October 13,2021 in Divorce

During the divorce process, a couple will need to address ownership of multiple types of marital assets. The equitable division of marital property will provide both spouses with a fair share of the money and assets they acquired during their marriage. While the division of some types of assets may be straightforward, other types of property can present complications, and spouses may encounter contentious disputes as they address these issues. Family businesses are one type of asset that can sometimes be difficult to address, but by understanding their rights and options, spouses can make decisions that will provide them with the financial resources they need going forward.

Is a Business Considered Marital or Separate Property?

A family business will be part of the marital estate if it was founded or acquired while a couple was married. In these cases, business assets will need to be considered alongside other marital assets and debts. If a business was owned by one spouse before the couple was married, it will usually be considered separate property, and that spouse will be able to maintain sole ownership of business assets. However, a business owned by one spouse may become commingled with other marital property, such as if the couple invested marital funds in the business. A spouse will be able to maintain ownership of any business assets that can be traced back to separate property, but other business assets may need to be divided between the spouses.

Options for Dividing Business Assets

In many cases, one or both spouses may wish to ensure that a family business can continue operating, especially if the business is the primary source of income for either spouse. Spouses may be able to address ownership of a business through one of the following options:

• Sole ownership - The spouse who was primarily responsible for managing a business may be able to maintain ownership of all business assets. To do so, they will need to determine how to divide other marital property in a way that provides the other spouse with assets of a similar value. 

• Co-ownership - If both spouses have been closely involved in a family business, and they are on good enough terms to be able to continue working together, they may decide to co-own the business and act as business partners going forward. They will need to be sure they fully understand each spouse’s ownership share of the business, as well as their responsibilities toward the business and whether either spouse will have the option to buy out the other spouse’s share of the business in the future.

• Sale of the business - If other options will not be workable, spouses may choose to sell a family business to a new owner, and they can divide any profits earned from the sale as part of the asset division process. 

Contact Our Brunswick Property Division Attorney

At The Law Office of Whitney K.S. Miller, LLC, we provide representation for divorcing spouses, helping them negotiate settlements that will protect their financial interests and allow them to be successful as they move forward with their lives. We can help address ownership of family businesses and other complex assets, as well as any other issues that may arise during the divorce process. Contact our Wayne County asset division lawyer at 330-725-4114. We offer free consultations in most cases.

Sources:

https://codes.ohio.gov/ohio-revised-code/section-3105.171

https://www.forbes.com/sites/catherineschnaubelt/2019/03/15/how-to-divide-the-family-business-in-a-divorce/?sh=7676a6b842fe

https://lawrencefinancialplanning.com/blog/what-happens-to-the-family-business-in-a-divorce-five-questions-to-consider