Divorce can be particularly complicated for business owners, and many people wonder how they can protect their company while ending their marriage. What should you know?
Is your business marital property or separate property?
In Kentucky, any property you acquire during your marriage usually counts as marital property and must be split up if you get divorced. This could include a business you started during your marriage or the growth of your business during your marriage, even if only one spouse was really involved in the company.
How are businesses divided in a Kentucky divorce?
Figuring out what a business is worth often requires the assistance of a professional business appraiser. Calculating your business’s value may consider the company’s assets and debts, potential future profit or the current market conditions.
Kentucky courts try to split things fairly, but that doesn’t always mean equally. They may consider what each spouse added to the business and what each spouse will need in the future. A fair division of your business may involve one spouse buying out the other’s share, selling the business and splitting the money or continuing as co-owners.
Can you keep your business running smoothly during divorce?
A divorce can mess up how your business runs, especially if both spouses participate in managing it. Employee morale and productivity can drop because of uncertainty and changes at the top. Clients and suppliers might also feel the impact.
During this change, try to stay professional. Regular updates to your employees, clients, and suppliers about how the business will keep running during and after the divorce can help keep things stable.
How can you protect your business?
If you have a prenuptial or postnuptial agreement that says the business is separate property, this can help you protect your stake in the business. An existing buy-sell agreement can also offer guidance for a potential sale. However, even without these documents in place, you can safeguard your ownership of the company.
One way to protect your business is to pay yourself a fair salary. If you put all the money back into the business, the court might see the growth of the business as marital property. This could mean your spouse gets a bigger part of the business in the divorce.
It is also vital to keep detailed and clear records of all business transactions, investments and financial decisions. These records can clearly separate business assets from marital assets.
Lastly, an experienced family law attorney can help you identify the right path forward in your situation. They can give you advice that fits your specific situation, helping to protect both your personal and business interests during the divorce.
A divorce can really affect your business, but understanding the legal details and preparing properly can lessen these effects. With the right knowledge and guidance, you can handle the challenges a divorce might bring to your business.