S Corp and divorce

My husband and I are thinking of divorcing. Neither has moved out of the house yet although we are sleeping in separate bedrooms. We have had a business (S corp) for 10 years now that was started after we married (we each own 50%). That is our only source of income and we do take a small salary that actually goes to pay the business taxes. The way we actually get paid is by a draw that we each take monthly (no set amount). Now that we are thinking of divorce, can one party force the other to buy or sell the other one out? Can a party simply walk from the business or shut it down?

No, neither of you can force the other to buyout your interest, but a judge could in an equitable distribution hearing. It is also possible for you both to walk away from the business and shut it down if that is the agreement between you and your spouse. Either way, you will want to make sure that you are still receiving your fair share of the marital value from the business.


Anna Ayscue

Attorney with Rosen Law Firm Cary • Chapel Hill • Durham • Raleigh • Wake Forest

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