Colorado has no shortage of entrepreneurs, and divorcing couples who started a business together often need to consider how to divide it. Under the state’s equitable distribution laws, two spouses may negotiate a plan to split their business fairly.
Assets acquired in marriage require each spouse to receive his or her fair share during a divorce in Colorado. As noted by Reader’s Digest, factors that may affect a fair division include the health and age of the two spouses. If one spouse can no longer run the business or wishes to retire, a divorce may provide an option for an exit strategy.
Taking full ownership of a jointly owned business
If one spouse can operate a family business on his or her own, a divorce could offer an opportunity to buy out the other spouse. The court generally views a jointly owned business like a partnership. This typically requires purchasing the company for its appraised value.
As noted by Forbes magazine, a nontaxable spouse buyout may occur when transferring property during a divorce. A couple might decide to negotiate a payment arrangement as part of their divorce settlement. Depending on a business’s structure, a company may also have an option to buy back the shares from the departing spouse.
Selling the business and splitting the profits
A couple may decide that a successful divorce includes moving on from their business. A professional appraisal may prove helpful in determining a business’s fair selling price.
After attracting a buyer and closing the deal, splitting the profits could provide welcome cash for a new business or single-person lifestyle.