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A couple who owns a business could face a complicated divorce

If a couple owns a business together, perhaps one that they started after getting married, it may mean that getting divorced is very complicated. The business could suffer or be entirely lost.

The problem is that a lot of couples with young companies invest as much money as they can into the company. They have to, hoping that the business will grow and eventually pay them back many times over.

In a divorce, though, they may both own 50 percent of the business. If they do not want to keep running it together after the split -- some couples do -- then they have to sell the company to a third party. This is how they wind up losing the business, even if they wanted to keep it, because there are not many other ways to split that asset up.

Of course, another option is for one person to pay the other for his or her half of the company. If the business is worth $500,000, that person could pay $250,000 to buy out his or her ex's share.

However, with almost all financial assets tied up in the company itself, does either spouse actually have the capital on hand to make that purchase? Many do not. In some cases, other assets can get exchanged, but many companies are worth far more than what business owners realistically have on hand.

As you can see, it is very important to plan in advance if you are headed for divorce and you own your own business. You must know all of the options you have to protect your company.

Source: MarketWatch, "How to protect your family business during a divorce," Daniel Thompson, accessed May 29, 2018

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