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Dividing Family business

Posted by JimBob 
Dividing Family business
September 14, 2021 12:25PM
Hi, another post... How do courts divide a family business? I want to buy her out somehow (she is 50% share holder), but what happens if she does not want to be bought out. I can't think that continuing to work together (although I run the business and do 90% of the work, running it, staffing etc) would be in our best interests? Would the courts insist on one person leaving the business?
Re: Dividing Family business
September 14, 2021 02:57PM
>>Would the courts insist on one person leaving the business?

Basically, yes. It is hardly ever a good idea for an estranged ex husband and wife to continue to run a business together.

You do not say what role you each play in this business. Although it does happen it is actually quite uncommon for a husband and wife to be joint CEOs of a business. What is much more common is that the business is actually the means by which one spouse earns his/her living. The other spouse is then made a joint shareholder or a director of the business (usually on the advice of an accountant who sees nothing but tax but never divorce) so that income can be split in order to take advantage of the nil or lower rate tax band of the spouse less active in the business. In the case of this latter type of business it is hardly ever 'divided' because it is basically the income of one of the spouses. The spouse less active in the business usually just has to give up his/her share.
Re: Dividing Family business
September 15, 2021 04:37PM
It is actually a business we started together but as the years have gone on it is me who runs it from day to day. She did do more, but never more than 30% of the work load, but has lost interest and really gives very little input now. For the past 5 years I have done 90% of the work and have far more knowledge about our industry than she does. Although we have staff who can run it without daily input from me she would have difficulty running it successfully on her own.
Re: Dividing Family business
September 15, 2021 07:02PM
If it has staff it is clearly more than simply a vehicle by which you earn your income. What your wife will receive in return for giving up her share of the business very much depends upon how much the business is worth and what assets it has.
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