Divorce When You Own a Family Business

Family businesses have specific concerns when a marriage ends. Business ownership impacts property division, spousal support, and financial stability, making it essential to understand how Pennsylvania law applies. Whether the business was started together or brought into the marriage by one spouse, its future must be carefully considered during divorce proceedings.

As a business owner, it’s important to talk to a Bucks County family attorney about your situation. You need to know how to protect your interests and find practical solutions in order to move forward with confidence.

How Business Ownership Affects Property Division

Pennsylvania follows the equitable distribution model, meaning marital assets, including businesses, are divided fairly, but not necessarily equally. The way a business is treated in divorce depends on when and how it was established.

• Started during the marriage. A business created during the marriage is generally considered marital property, meaning both spouses may have a rightful claim to its value. Even if only one spouse actively runs the business, its assets, revenue, and growth during the marriage are likely subject to division.
• Business ownership before the marriage. A business started before the marriage is usually considered separate property. But if the business grew significantly during the marriage due to joint efforts or marital funds, the increase in value may be subject to division.
• If both spouses work in the business. When both spouses are involved in running the business, determining each person’s contributions is key. Examining roles, responsibilities, and financial investment is part of establishing a fair division.

Beyond these factors, it’s also important to recognize that if one spouse primarily ran the business while the other supported the household or worked in a lesser role, spousal support (alimony) could be awarded. Should this be the situation, each spouse’s income and earning capacity will be reviewed along with the profitability of the business.

In some cases, a spouse may be awarded higher spousal support instead of a direct business share, particularly if the other spouse continues running the business post-divorce.

Possible Solutions for Dividing a Business

Every divorce has its own details to review. One spouse can buy out another spouse, which can be particularly helpful if one spouse wants to retain control of the business. The buyout can happen through a cash payment, structured settlement, or asset exchange.

Selling the business could also be the appropriate move. Should neither spouse want to continue operating the business, selling it and dividing the profits offers a simple solution. Or, in rare cases, couples choose to remain business partners even after divorce. This requires strong communication and a well-drafted partnership agreement to define roles and responsibilities.

To ensure fairness, it may be necessary to hire a financial expert to determine the business’s value. A Bucks County family attorney can help you understand your rights, negotiate a fair settlement, and protect your financial future.

Is it time for you to talk to a divorce attorney about your family business? Have a conversation with the skilled legal team at Kevin L. Hand, P.C. to explore your options. Call today 215-515-2604.