Your Family-Owned Business and Divorce

Married couples tend to mix many elements of their lives: friend groups, finances, and hobbies. Some couples go even further and mix their relationship with their careers by running a business together. 

A family-owned business requires unique considerations during a divorce — the two parties aren’t just spouses; they are also business partners. The team at Karen Ann Ulmer, P.C., can help you navigate these legal challenges. 

No Prenup or Postnup? 

The best way to mitigate stress and contention over a family-owned business in a divorce is to create and sign a prenuptial or postnuptial agreement prior to the divorce, agreeing on how the two parties will divide or trade all assets. 

If you do not have either of these documents, you must determine an equitable division of assets during the divorce process. This can be much more challenging, so we recommend hiring an experienced attorney to help you through negotiations. 

Unique Challenges of Family Businesses and Divorce 

Business interests are always tricky to navigate in a divorce, especially if the business owner is the sole income provider. However, a family business owned by both parties presents its own set of considerations. A court must first determine whether the business constitutes marital property and is thus subject to equitable distribution under Pennsylvania law. 

To make this determination, a judge will consider factors like the funds used to start the business and the business’s value before, during, and after the marriage and divorce.  

Who Owns the Business? 

It is crucial to have a complete understanding of who owns the business to determine whether it is a marital asset. For example, if a trust or a previous generation owns the business, and neither party technically owns it yet, it follows different rules for property division. 


If one party inherited the business or received it as a gift, even during the marriage, the business is considered separate property, not marital property. Additionally, if one party may receive a portion of the business as an inheritance in the future, that portion also counts as separate property. 

Alimony and Child Support 

Many people wonder how the income from a family-owned business will be divided after a divorce. If you are pursuing a divorce, you can use your ex-spouse’s salary for alimony and child support settlements. 

What If the Business Goes Under? 

Some people try to continue co-owning the business after a divorce when considering the division of assets. Others opt to receive a business valuation and have one partner buy out the other’s portion. If you choose to do this, you can receive a lump-sum payment upfront and avoid any financial repercussions if the business goes under. 

There are always complicating factors when pursuing a divorce. Tied-up assets, like co-owning a business, can make an already-challenging process even more complex. Reaching out to a trusted divorce attorney from Karen Ann Ulmer, P.C. can help you navigate dividing a family-owned business during a divorce with confidence. Call or email today.