Marriage And Separation Advice

A divorce settlement on closely held business is not all that complicated. The hardest part can often be agreeing which way and how to determine who will receive what from the divorce settlement. A closely held business suggests by definition that it is a business that requires specialized skill or was built and maintained by only one of the parties in the divorce. A business that was established with sole proprietorship or even limited liability or partnership is generally recognized legally as a sole proprietor business that isn’t likely to be split in the usual sense.

A divorcing spouse can only regard the interest in a divorce settlement on a closely held business if there are no penalties, restrictions, or liabilities that cannot be covered in regard to that business interest. In other words, most states simply respect that the business owned is one of skill and could not be considered transferable. If you are a certified physical therapist with your own practice and your spouse is dog breeder, your spouse obviously lacks the necessary educational skills to control or have a vested interest in the physical therapy practice. It’s just not logical and most states will recognize that in said situations there is no way to allow the divorcing spouse interest in that business.

A business that can be run by either of you is often a different story. If the family income is derived from a marine supply store and each party has an active role in creating the success of the business, this is not a closely held business and can be split evenly. A divorce settlement on closely held businesses is designed to prevent the loss of business. A physician cannot lose his or her practice through divorce but can be ordered to pay alimony and child support from the income that his or her practice brings in. This idea is the entire basis of coming to a reasonable divorce settlement on a closely held business.

A spouse with a vested financial interest in a closely held business that must sell their portion at the finalization of the divorce is likely to lose money on the arrangement. However, maintaining any vested interest in the closely held business is likely to become more of a detriment over the long run than an advantage and thus selling at a discounted value is still a better arrangement.