How can I protect a professional practice or business in a Louisville divorce? While the management of a professional practice in a divorce is similar to handling business interests, each corporate structure can contain unique clauses and provisions in their entity’s documents that can complicate the marital interest’s division in the asset.
How do you protect all the hard work and money you’ve invested in building these valuable assets? Is it possible to make sure you come away from your divorce in complete control of your business interests? Our experienced divorce and family law attorneys have represented many clients with similar interests over our decades of service to the greater Louisville area. We understand your concerns and work to accomplish your goals for the divorce while protecting your interests.
Establishing the Nature of the Asset and a Valuation of A Professional Practice or Business Interest
The first step to protect a professional practice or business in a Louisville divorce is to identify the nature of the asset itself. Did you own the practice or company prior to the marriage? If so, it is more than likely going to be at least partially a “separate” asset during property division. If you owned it prior to the marriage but used marital funds or labor to support the business or medical practice, the asset may partially have a marital property interest. If the company or practice was started or obtained after the date of the marriage it may be characterized as a marital asset, subject to marital property division. If you wish to keep some portion of marital property, the spouse’s portion of the marital interest must be accounted for during marital property division.
A detailed valuation will be required if the professional practice or business interest is at least partially a marital asset. Valuation is established by an expert witness based one of the accepted methods of valuation established under Kentucky family law. Usually, the value of a business is based in whole or in part upon the assets of the practice or company, accounts receivable, income generated by the interest, customer or patient data and goodwill. While physical assets such as real property and inventory are relatively easy to value, intrinsic aspects of the operation, such as goodwill, are much more challenging to establish. The value of goodwill is based upon the patient or client base of the business, experience, and the principal’s reputation within their respective markets.
Valuation can be particularly challenging, as the parties have opposing interests when establishing the valuation of a marital or partially marital asset.
Dividing Professional Practice Assets in a Louisville Divorce
Once the nature of the asset (separate, marital, or commingled) and the valuation of the professional practice or business is established, several ways exist to protect a professional practice or business and resolve the equation of an equitable property division. The parties may reach an agreement regarding these interests before the divorce begins or while it is in process. The Court must review and approve any such agreement between the parties. In other cases, once the value of the other spouse’s marital interest in your business or professional practice is established, it must be offset by other marital property held by the owner. This can include equity in the family home, investment and financial accounts, retirement assets, investment real estate, or collections. It is often possible to structure a contract to repay part or all of the marital interest over time when necessary.
Marital property valuation and distribution are difficult to predict. Retaining control of or outright ownership of these interests will be based upon several complex factors and the unique characteristics of your own business or professional practice.
Contact an Experienced, Proven Louisville Divorce Attorney
What are the best strategies to protect your professional practice or business interests in a Louisville divorce? If you are in professional practice and/or have an interest in a Management Services Organization (MSO) or other business interests, you need an appointment with one of our experienced, proven Louisville divorce attorneys at Dodd & Dodd. Ask about the tax impact of the divorce and any marital property disposition (especially retirement and pension accounts) and our experience in managing cases much like yours.
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.
