How will a Louisville divorce affect a small business owner? A recent Small Business Association (SBA) study showed there are more than 350,000 small businesses across the Commonwealth, representing more than 95% of corporate entities and companies. How is a business interest managed when an owner’s marriage is headed for a divorce? Business owners and licensed professionals often have substantial interests to protect. This is why a divorcing business owner and their spouse need sound advice and counsel from the experienced divorce and family law attorneys at Dodd & Dodd Attorneys, PLLC.
There are many important decisions to be made during any divorce. These decisions and equations become much more complex when the divorce involves the ownership of a professional practice or small business. How will a Louisville divorce affect a small business owner, physician, or licensed professional who owns an interest in a small business or practice? In these cases, the clients of Dodd & Dodd who own these interests are seeking to ensure they maintain ownership and control of the company during and after the divorce. This can present unique challenges during the division of marital property.
If the company or practice was established or acquired prior to the marriage, it may continue to be the separate asset of the owner and not subject to marital property division. If any marital funds or labor were used to support the business interest, there may very well be an argument to be made regarding the amount invested, as well as the present-day value of the “marital interest” or portion of that business asset.
However, if the business or professional practice was begun or acquired after the date of the underlying marriage, the asset may very well be considered marital property, subject to equitable division under Kentucky family law. If you owned the company prior to the marriage, is there a prenuptial agreement in place? If the business asset or practice will be considered marital property, it is prudent to discuss the possibility of a postnuptial agreement to protect your interests and resolve any potential conflicts related to outright ownership of the asset after the divorce.
If the matter becomes contested during the divorce process, a marital asset such as a business interest must be properly valued and equitably divided. How will a Louisville divorce affect a small business owner in these cases? “Valuation” is usually established through an expert witness. In cases involving substantial disputes, the Court can select this expert (with the parties usually dividing associated costs), or the parties themselves may each provide their own expert witness to establish valuation.
The owner of the business interest almost always wishes to see the lowest possible valuation. This would result in a much lower value of marital assets or other property or instruments required to “offset” their spouse’s equitable marital interest in the company or practice. The spouse of the business owner or licensed professional has exactly the opposite interest during valuation. The higher the amount of the valuation, the higher the amount they will receive during marital property division.
If you own the small business interest, it would be prudent to consider using the equity in the family home and/or retirement accounts and assets to offset your spouse’s marital interest and maintain complete ownership of the asset after the divorce is completed.
How will a Louisville divorce affect a small business owner? How will the owner of a business interest in a divorce or their spouse protect their own legal and financial interests? You will need a Louisville divorce and family law attorney with experience in divorce, business ownership, and tax law in order to protect all of your interests while accomplishing your goals in the divorce.
You need proven, skilled divorce and family law attorneys with extensive experience serving small business owners in a Louisville divorce.
We invite you to review the strong recommendations of our former clients and the legal industry and contact Dodd & Dodd or call 502-584-1108 to schedule an appointment with one of our attorneys.
