Throughout your life you have worked hard for what you have. You went to school, studied hard and graduated. After that, you not only got married, but you also started your own business. You are very proud of your business and everything that you have accomplished. You want that success to continue well into the future.
While your business is doing great, your marriage unfortunately isn’t. You and your spouse have decided that both of you would be better off apart. Now that you’ve decided to divorce, you are worried about your business and the legacy you’ve built.
How is property divided in Divorce?
The state of Rhode Island follows an equitable distribution model. This means that all of your marital property, assets and debt will be divided in a way that the courts deem as fair. It is more than likely that your business, or part of it, is considered marital property.
What will happen to your business?
The first thing you should do is determine the value of your business. Due to the complicated nature of property division while owning a business, you should consider utilizing a professional. Once the value of your business has been determined, you will have a few options to consider.
- Buy out: You can choose to buy out your spouse’s interest in the company. Essentially this means you would buy out the portion that you would owe your spouse after the value of your business has been determined.
- Co-own: Rather than divide this important asset, the two of you can choose to run the business jointly. This will require communication and you should create a legal contract and business plan to ensure that the two of you can amicably run the business.
- Sell: In some cases, the best way to ensure you are both compensated is to sell your business. Once you sell, the two of you would divide the proceeds.
There are pros and cons to each of these options. You and your spouse must consider the current economic climate, tax implications and your ability to work together before making a decision.