How to handle a family business in divorce mediation
A family business can make an otherwise amicable divorce feel more complicated. You may want to protect something you built together while also making sure both of you receive a fair share of the marital property. Mediation gives you a setting to work through those decisions together rather than turning the business into another source of conflict.
Here are some practical steps to consider during divorce mediation.
Establish the business’s ownership and financial picture
Start by gathering the information you need to understand how the business operates and who owns what. This may include:
- Ownership agreements and business records
- Recent tax returns and financial statements
- Information about each spouse’s role in the business
Ohio law generally treats property acquired during a marriage as marital property, while separate property remains separate if it meets certain requirements. The law also requires spouses to fully disclose marital and separate property, along with their assets, debts, income and expenses.
Determine the business’s value
A reasonable valuation gives you a basis for deciding how the business fits into your overall settlement. You may need a qualified valuation professional when the business has complex finances, multiple owners or significant assets.
The value does not necessarily mean you need to sell the business or divide its ownership. Instead, knowing its value can help you consider the business alongside your other marital assets.
Decide who will own and operate the business
You need to decide what role each of you will have in the business after the divorce. One spouse might retain ownership while the other receives other property to account for their interest. In other situations, you may agree to continue sharing ownership under defined terms.
The right arrangement depends on your business, finances and plans after divorce.
Account for the business in the overall settlement
Consider the business alongside the rest of your marital property rather than treating it as a separate issue. For example, you might account for the business’s value when dividing investments, real estate or other significant assets.
This approach can help you create one overall settlement instead of making the business the sole focus of your negotiations.
Put the business terms into the divorce agreement
Once you reach an agreement, put the business-related terms in writing and make them specific. Your agreement should address matters such as ownership, management responsibilities and any payments or transfers you have agreed upon.
Make the business part of a workable settlement
Handling a family business during divorce requires more than deciding who gets what. You also need an arrangement that works after the marriage ends. Before finalizing your agreement, consider reviewing the business records and proposed terms with an attorney who can help you understand how the arrangement affects your rights and obligations.
