What are the risks of a business owner in a Louisville divorce? What does the owner of a small business, family-owned company, corporate shareholder or licensed professional face during a divorce in Louisville?
3 Key Takeaways Regarding the Risks of a Business Owner in a Louisville Divorce:
- Will the business asset be considered to be a marital asset, separate property, or a commingled asset?
- If it is a marital asset, your spouse will have a marital interest in the business that must be bought out or offset with other marital property during property division.
- The valuation of the business asset is a crucial issue. A higher valuation will result in a higher marital interest value for the spouse of the business owner. This means it will cost the business owner more to buy-out their former spouse’s interest in the marital asset.
The central issues associated with the ownership of a business or professional practice in a Kentucky divorce include:
- the nature of the marital property interest in the business
- accurate books, accounting, and tax returns
- establishing an accurate valuation
Generally speaking, in the absence of a prenuptial or post nuptial agreement the marital interest in a business or professional practice will be a central issue for a business owner or licensed professional in a Kentucky divorce. Some of the risks of a business owner in a Louisville divorce include, but are not limited to:
- Your spouse may be awarded a large portion of stock or ownership in the business or professional practice during marital property division. When this happens, that spouse may elect to influence the future of the company or sell their interest to an adverse party who would attempt the same. There may be some authority, such as voting rights, associated with that interest and actions which the former spouse may take which could lower the value of the associated stock or the company itself.
- The non-ownership spouse may attempt to impose a higher valuation for the business itself in order to increase their portion of the marital interest in the company. Ask your Dodd & Dodd divorce attorney how to best manage this issue and fight to ensure an accurate valuation.
- Any attempt to manipulate or reduce the value of the company, misrepresent income or earnings or otherwise affect the operations or value of the business prior to or during the divorce may be viewed as an adversarial action (a breach of the spousal fiduciary duty) by the Court resulting in harsh financial sanctions, or worse, the loss of the business altogether.
The good news for any business owner or practicing professional is the experienced and proven divorce and family law attorneys at Dodd & Dodd have represented business owners and professionals in divorce for decades. We have proven strategies to protect your interests. We provide sound counsel as we plan and prepare for an impending divorce. We work to protect your business at every step of the divorce process.
While there are genuine challenges, the risks of a business owner in a Louisville divorce can be reduced through prudent legal strategies to minimize your exposure, offset any interest your spouse may have in the company and implement protections to preserve your rights and livelihood.
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.
