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Day of Reckoning: Dividing the Family Business |
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One of the potentially most contentious tasks facing the divorcing couple is dividing the family business. Some avoid conflict by trading the business for the housewhoever gets the business gives the house lock, stock, and barrel to the other spouse. |
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But this strategy is not always fair. The only way to know for sure is to have a reputable business appraiser value the business. More expense, but probably well worth it. |
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Depending what the appraiser says, it may be fine to trade the house for the business. But what if the business is worth a lot more than the house? What if the appraiser can't figure out what the business is worth because your soon-to-be ex won't provide access to the ledger? |
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If you spouse won't cooperate with the appraiser, you need a judge's help. You may have to hire a lawyer who will then ask the judge to order your spouse to cooperate. |
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But if cooperation is in the airand if the business is worth more than the housethe two of you can agree on a financial settlement to compensate the partner who walks away from the business. Of course, such calculations are complex, and you will probably want to engage a lawyer to help you determine the exact amount to be paid over what time frame and at what rate of interest. |
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Here's an example of how the calculations might work: Marty's dental practice is valued at $350,000, and the house, which Sue wants, is valued at $200,000. The mortgage is $50,000. If Marty sold his practice, he'd have to pay $100,000 in taxes. If Sue sold the house, she'd have to pay $40,000 in taxes. |
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