When you spend endless time and money to create your dream business, going through a divorce can leave you feeling worried about your company’s future. Because divorces involving businesses in Kentucky involve complex laws and obstacles that the average divorce doesn’t have, it’s crucial that you understand the divorce process for business owners & entrepreneurs in Louisville.
The team at Straw-Boone Doheny Banks Mudd Catalano & McKinney, PLLC, shares decades of legal experience navigating complex divorces involving businesses here in Kentucky. Our experienced divorce lawyers can help you understand the divorce process and how to protect your business throughout proceedings.
Determining Whether a Business Is Marital Property in Kentucky
Louisville is home to countless thriving businesses, with 93.2% of those being small, locally owned businesses with fewer than 50 employees. Whether you own one of these or a much larger business, dividing a business in a divorce can be complex and highly contested. To better understand how your business will be divided during your divorce, you first need to determine whether it is considered marital property.
Marital property in Kentucky includes any property or debt that a couple collected while they were legally married. If you acquired or started the business during your marriage, it is likely marital property, even if your spouse has never contributed to it. There are very few scenarios where businesses that meet this criterion are not considered marital assets.
Even if you started the business before getting married, it could still be considered partially marital. When marital funds are invested in the business, it becomes partially marital. If your spouse contributed to the growth of the business in any way, they may be entitled to part of its value. Standard business growth during a marriage may also be considered a shared asset.
One of the most effective ways to help protect your business interests is to keep business and marital finances separate. Never buy business materials with marital money, and vice versa. Keep separate accounts for your marriage funds and your business. It isn’t guaranteed to make the business untouchable, but it can help show more separation from your marriage. A lawyer can help you determine whether your business is marital property and how to protect it.
Valuing Your Louisville Business
In order to equitably split a business in Kentucky, its value must be fairly determined. Since Louisville generatesmore than a third of Kentucky’s GDP, many of the city’s businesses are quite valuable. These valuations aren’t just based on balance sheets, current inventory, or last year’s income. Getting the business valued by a professional can help prevent losing value, either to a massive under- or over-estimation of the business’s value.
A common way this is done is by considering the business’s fair market value. Factors that go into this determination include:
- Income
- Business assets
- Property held by the business
- Current growth and growth potential
Understanding Divorce Laws for Business Owners in Kentucky
When a business in Kentucky has been classified as entirely or partially marital property, it must be split as any other asset would be. However, there are ways to protect your business interests in this process.
Some agreements settle on joint ownership, continuing to operate as business partners after you divorce. However, if a marriage doesn’t end well, it’s likely that this is going to be incredibly difficult. This option only tends to go well in very amicable divorces where both spouses are completely fine continuing to work together.
When negotiating, you may be able to offer an alternative split, so you keep control of the business. This could mean paying your former spouse their share of its value in cash. It can also be done by trading other marital assets, such as home equity, to replace the value of the business. These only work when you have enough assets or liquidity to cover the value your former spouse is owed.
Hire a Divorce Lawyer and Protect Your Investments
At Straw-Boone Doheny Banks Mudd Catalano & McKinney, PLLC, we understand how important your business is to you. We know that your case should be treated with an approach tailored to your unique needs, and that you need strong, compassionate legal support to make sure your interests stay protected. We leverage decades of legal experience, knowledge of business law, and experience in local courts to protect business owners across the state.
FAQs About Divorce Process
Is My Spouse Entitled to Half of My Business If We Divorce in Kentucky?
If your business is determined to be a marital asset, your spouse will be entitled to some of it. The amount of your business that your spouse is entitled to will depend on a variety of factors, such as whether you used marital funds to help the business, whether both spouses contributed to the business’s growth, and more. If the business is only partially marital, then a 50/50 split of its value is unlikely. Each case is unique, and many factors determine how a business is split.
How Do You Protect Your Business During a Divorce in Kentucky?
If you own a business and are going through a divorce in Kentucky, it’s vital that you hire a divorce lawyer who can help you understand your rights and how the process will work. They can evaluate your assets, help you build strong legal strategies to protect your interests, and negotiate for a fair split of all property, debts, and investments involved in your case.
How Much Does It Cost to Hire a Divorce Lawyer for Business Owners in Kentucky?
The cost of hiring a divorce lawyer for business owners in Kentucky will vary immensely depending on the unique details of your case. Contested, complex divorces that require court intervention and the splitting of a business will likely cost more than uncontested, simple divorces that do not involve high-value assets. You should discuss your lawyer’s fees and their pricing structure during your initial consultation.
Does an LLC Protect Assets in a Kentucky Divorce?
No, an LLC does not automatically protect assets from a divorce in Kentucky. The business may still be considered a marital asset and be valued for division. An LLC can offer valuable business protections, and may also help show your investment in the business, but it does not necessarily keep it away from divorce proceedings.
Contact Straw-Boone Doheny Banks Mudd Catalano & McKinney, PLLC, Today
Based here in Louisville, the dedicated team of attorneys at Straw-Boone Doheny Banks Mudd Catalano & McKinney, PLLC, has assisted clients across the state in protecting their business interests during family law matters like divorces.Reach out to us today to learn more about our trusted divorce services in Louisville.
