The attorneys at Dodd & Dodd have decades of experience representing licensed professionals and business owners in Louisville divorce cases. The division of the marital interest in a professional practice or business during the process of a divorce is one of the most complicated financial and legal issues a licensed professional or business owner will confront during their divorce. The most significant challenges often arise during the division of marital property. Each spouse has an equitable stake in marital property and its division during a Louisville divorce.
Key Takeaway About Licensed Professionals and Business Owners in Louisville Divorce Cases:
- The classification of the asset (separate property, marital property, or commingled) will have a substantial impact on how the practice or business is handled in a Louisville divorce.
- There are several valid ways to establish the valuation of a professional practice, a business, or an interest in a closely-held company.
- If the asset is considered, in whole or in part, to be marital property, the licensed professional or business owner will usually offset their spouse’s interest with other marital property, a security interest, or cash on hand.
What do licensed professionals and business owners in Louisville divorce cases need to know? How is the nature of an ownership interest in a professional practice or closely-held business going to be handled in a Louisville divorce? How is property characterized during the process of a Kentucky divorce? How is the value of this type of asset established? What is the marital interest of each former spouse? How will the licensed professional or business owner keep and protect their practice or company? These are a few of the complex questions and issues that must be addressed and resolved before the divorce can be completed.
The primary question centers on when and how the business or professional practice began. Was the interest acquired before the date of the wedding, or during the course of the marriage itself? What (if any) marital funds or labor have been used to support the viability and value of that asset during the course of the marriage?
If the licensed professional formed their practice, or a business interest was owned by one of the parties before the wedding day, that specific asset may be considered to be the “separate” property of its owner, unless marital funds were used to support that asset, or the non-owning spouse provided any form of labor or work during the time the couple was married.
Our clients who are licensed professionals and business owners in Louisville divorce cases are always intensely focused on the process of establishing the marital interest (if any), the valuation of the asset(s), and how to maintain control of their professional and business interests while ensuring smooth operations during and after the divorce.
If the asset is in whole or in part considered to be marital property, the equitable division of that marital property will begin with the need for a valuation of the ownership interest in the professional practice or business. How much is the marital interest in the company or practice worth? There are several valid methods to establish the valuation of a business-related asset in a Louisville divorce, including, but not limited to, an appraisal by an expert witness, a factored value based on revenues, recent sales of very similar assets, or selling the interest or asset itself. Expert witnesses often testify as the Court works to establish an accurate valuation.
The key aspect of these cases often lies in the parties’ opposing interests as they approach the valuation of a marital asset. If one party intends to keep any marital asset, they must offset the other spouse’s equitable marital interest as part of the marital property settlement. The owner of the asset usually wants the valuation to be as low as possible. This will reduce the amount they will have to pay to their former spouse to offset any marital interest in the professional practice or business. The party that does not own the asset usually wants the valuation to be as high as possible, as this will increase the amount their former spouse will have to pay to keep the asset during and after the divorce.
Licensed professionals and business owners want to protect the viability of their interests throughout the divorce while ensuring they can maintain their ownership position in that asset. There are tax ramifications for many aspects of marital property division, including the division of a business interest, significant investments, stock options, or retirement assets. Allen M. Dodd is not only an experienced and proven divorce and family law attorney but also a skilled tax attorney. For all these reasons and more, it is essential to work with divorce and family law attorneys with extensive experience and legal skill representing business owners in Louisville divorce cases.
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.
