Co-owned Business: How to Deal With It During Your Divorce

A couple talking to a lawyer about business and divorce
  • Understand your legal rights and seek professional guidance when dealing with your co-owned business during the divorce.
  • Consider alternative dispute resolution methods, including mediation, collaborative divorce, arbitration, and negotiation.
  • Hire a financial expert to evaluate your business value accurately, which is essential for a fair division.
  • Plan for the future of the business, including adjustments in management, ownership structure, and operating agreements.
  • Keep communication open and cooperative with your ex-spouse to maintain a positive business relationship post-divorce.

Getting a divorce can be a complicated and stressful experience, especially when separating shared assets such as a business. Co-owned businesses can be a challenge to deal with during a divorce as it involves a lot of legal and financial considerations. However, with proper knowledge and guidance, you can navigate this difficult time and come out with a fair settlement. This blog post will be discussing how to deal with a co-owned business during your divorce.

Understand Your Legal Rights

The first step in dealing with your co-owned business during a divorce is identifying your legal rights. This involves understanding the state laws surrounding business ownership and divorce settlements. Your business may be classified as marital property, separate property, or a combination. This classification will determine how your business is divided in the divorce. It’s essential to consult a lawyer specializing in business and divorce to understand your rights and legal options.

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Consider Alternative Dispute Resolution

Divorce litigation can be time-consuming and expensive. If you want to save time and money in dealing with your co-owned business during your divorce, consider alternative dispute resolution methods. Here are some options:


The divorce mediation process involves talking with a neutral third-party mediator to reach an agreement. The mediator can provide guidance and help you make decisions that are in the best interests of both parties.

Collaborative Divorce

In a collaborative divorce, each party is represented by a lawyer, but they work together to develop mutually beneficial solutions. This process usually involves frequent communication and cooperation between the two parties, which can help make the process smoother.


Arbitration is a form of dispute resolution where an arbitrator decides after hearing evidence from both parties. The process is usually quicker than litigation, and the decisions are legally binding on both parties. But it’s important to understand that the arbitrator may not have the same legal knowledge as a judge.


Negotiating directly with your spouse can effectively settle the matter of your co-owned business in a divorce. If you are willing to compromise, this is often the fastest and most cost-effective option. Try to stay open-minded and focus on coming up with a solution that works for both of you.

Evaluate the Value of Your Business

Before deciding on a settlement, you need to evaluate the value of your business. This involves assessing the company’s assets, liabilities, income, and other financial information. Getting a proper valuation of your business is essential to ensure a fair division in the settlement. This can be done by hiring a neutral financial expert or consulting with a business valuation specialist. Once you have an accurate valuation, you can negotiate a settlement that reflects the true value of your business.

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Plan for the Future

After the divorce settlement is finalized, you need to plan for the future of your co-owned business. This involves deciding on the management and ownership structure in the future. You may need to restructure the company’s ownership or management to accommodate the separation. It’s essential to have a plan for the business’s future to ensure its sustainability and continued success.

For example, you may need to change the business’s board of directors or shareholders. You should also consider creating an operating agreement that outlines the ownership structure and management rules for the company. Having a clear plan can help ensure that both parties are comfortable with how the business will operate going forward and reduce potential conflicts in the future.

Prioritize Communication and Cooperation

Finally, dealing with a co-owned business during a divorce requires effective communication and cooperation. You and your ex-spouse need to work together to ensure a smooth transition for the business. Communicating effectively during a divorce may be challenging, but this is crucial to achieving a fair settlement and maintaining a positive business relationship.

Dealing with a co-owned business during a divorce can be a daunting process, but it’s essential to approach it with a clear understanding of your legal rights and options. With proper planning, communication, and cooperation, you can come out with a fair settlement and ensure the continued success of your business. Don’t hesitate to seek the guidance of legal and financial professionals to help you navigate through this complicated process. Remember that the best outcome is one where both parties feel their interests have been taken into account.

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