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Specialty tag(s): Business Valuation in Divorce, Divorce for Business Owners, Divorce

How to Keep Your Business and Compensate Your Spouse During Divorce Negotiations

Thomas A. Greenwald | April 30, 2024

Divorce is a complex and challenging process, especially for business owners who worry about the future of their company. It is easy to become anxious or concerned that you may no longer have control over the company you built once the divorce is final. That is why so many entrepreneurs going through a divorce find themselves asking, “Can I negotiate a settlement that allows me to keep my business and compensate my spouse in other ways?” The answer is yes. With the right approach and good legal counsel, it is possible to retain ownership of your company using alternative compensation methods.

Understanding the Value of Your Business

In any situation, it is impossible to negotiate effectively without first knowing the value of assets and balance of debts in the estate. That is why you may first need to have a business valuation done for your company before diving into negotiations. This information intensive process provides all parties involved with an understanding of the company’s value and helps pave the way for more meaningful negotiations. Only by understanding precisely what the business is worth can both sides begin to come to an agreed settlement.

Exploring Alternative Compensation for Your Spouse

After you have determined your business’s value, you can start considering how to compensate your spouse without relinquishing a portion of your business. Alternative methods include:

• Offering a Lump-Sum Payment: This payment could be in the form of cash, assets, or investments equivalent to your spouse’s share of the business’s value.
• Property Settlement: You can also offer to compensate your spouse for their business interests with other marital assets, such as real estate.
• Alimony Adjustments: Some business owners offer increased spousal support during negotiations to account for the business’s value.
• Deferred Compensation Plans: These plans allow you to retain control of the business in exchange for paying your spouse over a period of time.

Divorce Negotiation Tips for Business Owners

• Communicate: Effective communication with your spouse is vital. Approach the negotiations with honesty and openness. Understanding each other’s needs and concerns can lead to a more amicable settlement.
• Seek Professional Advice: Apart from legal counsel, consider consulting with a financial advisor. They can offer insights on the tax implications of your settlement options and help craft a financially viable agreement.
• Explore Creative Settlement Options: Look beyond traditional methods like lump-sum payments. Consider solutions such as stock options or trusts that can satisfy both parties without compromising the business.
• Prioritize Amicable Solutions: Whenever possible, aim for an amicable settlement. Hostile negotiations can not only lead to a longer, more costly divorce process but also harm the business’s reputation and morale.

Facing a Divorce as a Business Owner? Contact Goranson Bain Ausley Today

At Goranson Bain Ausley, our team of trusted and knowledgeable divorce lawyers for business owners can provide you with the legal guidance you need for your unique situation. Our experienced attorneys specialize in navigating the complexities of divorce for business owners and helping them to retain ownership of their hard-earned businesses. Contact us today to schedule a consultation.

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