What happens when divorcing spouses co-own a business in Louisville? What happens to the business during marital property division?
When the soon-to-be divorcing spouses co-own a business in Louisville they must give serious consideration to this important asset and how it will be handled during the course of the divorce. What is to become of the business itself? What are the actual interests of each party in the business assets and debts? These answers can be straightforward or extremely complex.
When was the business acquired and by whom? If the company was started or acquired after the date of the marriage it will almost always be considered to be marital property. If one of the parties used an inheritance or separate property to acquire the company the issues become quite legally and financially complex. The divorce and family law attorneys at Dodd & Dodd have extensive experience in divorce cases involving a business or professional practice. We will provide sound advice and counsel based upon the specific unique circumstances of your case.
The first step is to determine the characterization of the business asset from a marital property perspective. If both divorcing spouses co-own a business in Louisville one might presume the asset is at least partially marital property. Marital property is to be divided equitably in a divorce in Kentucky. What options are available to the co-owning spouses in this type of case?
One option is to simply retain joint ownership as partners, members of an LLC or shareholders in a corporation and continue to work together to operate the company. This scenario may be less common in the case of a divorce, but there are couples who work very effectively as business partners but do not have the ingredients of a strong marital relationship.
A second option builds off of the above option, with each former spouse retaining their ownership interest, but one of the parties stepping out of the day-to-day operations of the company. This option usually involves issues associated with ongoing access to the books and the maintenance of voting rights, etc.
A third option is to sell the business and simply divide the marital property interest in the business equally between the parties.
The fourth option when divorcing spouses co-own a business in Louisville is for one spouse to buy out the other’s marital interest in the company. The party who wishes to keep the company must offset the other’s marital interest from their own portion of Marital property (you keep the equity in the house and/or retirement asset(s) and I’ll keep the business), take a business loan to cash out the others’ interest or provide a secured legal interest.
The division of a business or professional practice can present complicated issues in a Louisville divorce. There will be substantial tax issues for either or both of the parties. You need the experienced, proven counsel and advice of the attorneys at Dodd & Dodd.
We invite you to review the strong recommendations of our former clients and contact us or call 502-584-1108 to schedule an appointment with one of our experienced divorce and family law attorneys.
