Small Businesses and Divorce
If you’re a small business owner, you’ve probably poured a great deal of your time, energy and passion into the success of your company. What you may not realize is that, even if you operate the business without the direct involvement of your spouse, he or she still may be entitled to a share of that business in a divorce. A divorce can, but does not have to, spell the death of your small business. Read on to learn more about how your small business may be affected by your Kentucky divorce.
The best time to act to preserve your small business is before you have filed for divorce. Many small business owners who enter a marriage with their own business, or start a business during their marriage, will create a pre-nuptial or post-nuptial agreement that covers the business. The pre- or post-nuptial agreement can predetermine which spouse would be considered the sole owner of a business, in order to prevent the sale of the business in a divorce, or from co-owning the business with an ex.
If you and your spouse have already made the decision to divorce, there may still be other options to avoid selling your business in order to divide your marital property. If you are committed to continuing to be the one who operates your family business, consider offering your spouse another form of marital property equal in value such as the marital home, retirement account, or investments, to compensate your spouse for their share of the business. You could also request to pay your spouse’s share of the business in interest-bearing installments. Before adopting any of these strategies, be certain to obtain a fair and accurate valuation of your business from at least one reputable source.
Parties to a relatively-amicable divorce may have success in running the business together even after divorce, which can provide financial stability and even a lasting legacy for that couple’s children. If working hand-in-hand with your ex does not sound workable, consider involving a neutral third party or partner to act as a go-between. Finally, some couples decide that selling the business and dividing the profit equitably is the easiest option, allowing you both to move on completely.
If you are considering a divorce in the state of Kentucky, speak with the experienced and knowledgeable Louisville family law attorneys at Gwin, Steinmetz & Baird PLLC for a consultation, at 502-618-5700.