Who Gets Custody of the Family Business in a Divorce?
When Jennifer Lopez went on the Today Show last month, she brought up an interesting subject: What happens when the guy you’re divorcing is the same guy you’re in business with? In J-Lo’s case, Lopez is co-producing a new TV series, “Q’Viva — The Chosen,” with her ex-husband, Marc Anthony. The project has been in the works since long before the couple decided to split and — surprisingly — the business venture will survive their split. As Jennifer explained to Today Show host Matt Lauer, the passion and commitment both she and Marc feel towards the show outweighs their personal differences, so they have agreed to keep working together, despite any leftover emotional baggage.
You may not be a celebrity couple, but when you are a divorcing couple that shares a business, what becomes of your family business really comes down to priorities: Is it important to you that the business survive your divorce — or do you need to be divorced from your spouse in every sense of the word? If the survival of your business is what matters most, it may be possible to work with your spouse. It’s not that different from sharing custody of a child; if parents can manage it, so can co-owners of a business—provided they make the success of the business their top priority.
If one or both of you do not want to continue working with each other, there are generally three ways to keep the business going:
1. Work out a settlement in which you get the business, while your spouse gets other jointly owned property equal in value (probably your home). This may not work if you have a large, extremely profitable business, but should be manageable for a small Mom & Pop operation. Alternatively, make an arrangement where you get the business, but your spouse takes a cut of the annual profits.
2. Split everything down the middle, then use your assets (or obtain a business loan) to buy your spouse’s half of the business;
3. Liquidate the business, divide the proceeds, and start up a new business on your own. (This is the most likely scenario of both of you want to keep the business without working together.)
Some things to consider as you move ahead:
- Before you make any decisions regarding disposal of the business, you may want to hire an outside accounting firm to do a full audit of the business’s assets and liabilities. You will need to have a full valuation of the business anyway should the business be liquidated or split, but knowing this info before you negotiate your way forward will help you decide what your options are.
- If you decide to continue working together, draw up a written list of job responsibilities that each person will assume. That will help you avoid conflict in your new relationship as coworkers.
- Strange as it might seem, a few sessions with a relationship counselor might help you resolve issues from your marriage that may spill over into business life — with trust being the important one. If either of you holds residual resentments or distrust for the other, it could poison the atmosphere in your working relationship moving forward.
What options are right for your co-owned business? Whether you are considering a divorce or are already engaged in the divorce process, you need a skilled divorce attorney who will take the time to educate you about your business ownership rights and other potentially applicable rules, such as New Jersey’s equitable distribution statute. To learn more about business ownership in divorce, please contact us for an initial consultation.
Additional Sources:
Jennifer Lopez interview on the NBC’s Today Show – Discusses Life, Love & Business with her Ex-Spouse: www.youtube.com/watch?v=mbPvq1pxHI8
J’Lo’s Tv Show with ex-husband, Marc Anthony: Q’Viva — The Chosen: www.qvivathechosen.com/
