DIVORCING WITH A FAMILY BUSINESS. WHAT HAPPENS WHEN BOTH SPOUSES CO-OWN AND WORK IN THE SAME BUSINESS

Divorcing when both spouses co-own and work in the same business can be especially complex. Unlike other marital assets, a business is not just a financial entity—it’s often deeply tied to identity, livelihood, and long-term goals. When a couple decides to separate, figuring out what happens to the family business requires careful legal, financial, and emotional considerations.

The first step is to determine whether the business is family property under the law. In British Columbia, a business started or acquired during the relationship is typically considered family property and is subject to equal division, regardless of whose name is on the incorporation documents. Even if the business was started before the relationship, any increase in its value during the relationship may still be divisible.

Once it’s established that the business is subject to division, there are generally three options:

1. One spouse buys out the other. This is the most common outcome. A business valuation is done by a professional, and one spouse compensates the other for their share, either in cash, by offsetting with other assets (like the house), or through a structured settlement.

2. Both continue to co-own and operate the business. This is rare, but possible—usually only if the divorce is amicable and both parties are committed to keeping personal issues out of the business. A clear, updated shareholders’ or partnership agreement becomes essential to avoid future conflicts.

3. Sell the business and split the proceeds. If neither spouse wants or can afford to keep the business, selling it may be the cleanest option. However, this may not be practical for businesses that are dependent on one spouse’s skills or relationships.

The emotional side also plays a big role. A business often represents years of hard work and passion. Letting go—or watching an ex-spouse continue with it—can be difficult. At the same time, keeping the business together may prolong the emotional entanglement of the relationship.

Legal advice is critical in these situations. You’ll also need a financial advisor or business valuator to get an accurate picture of the company’s worth, cash flow, and long-term viability. In some cases, spouses may also agree to mediation or arbitration to avoid a long court battle.

In short, divorcing with a shared business is more than just splitting profits. It’s about deciding whether—and how—two people can untangle their professional and personal lives without destroying the value they’ve built.