When business ownership issue arises during a divorce, the usual challenges can become even more complex. The future of your business may be uncertain. It’s essential to understand what to expect when your Kentucky business is in the middle of a divorce.

Why Businesses Complicate Divorce Cases

Unlike dividing a house or bank account, dividing a business is not a straightforward process. Businesses are often intertwined with multiple financial, legal, and personal considerations. Data shows that marriages involving business ownership commonly end in divorce. Kentucky has a population of  4.6 million people, with a current divorce rate of 2.9 per 1,000.

Business ownership complicates divorce for many reasons:

  • Valuation challenges: Determining the true value of a business requires professional assessment. This can vary depending on the method used.
  • Marital vs. non-marital property: Kentucky divorce laws distinguish between property acquired before marriage and property acquired during marriage. This distinction is crucial when determining whether the business may be subject to division.
  • Ongoing income: A business generates future income that may impact spousal support or property division.
  • Third-party interests: If there are other business partners, shareholders, or employees, the divorce could affect more than the couple.

These factors make it imperative that you hire a divorce lawyer who understands both Kentucky divorce laws and the complexities of business ownership. Stange Law Firm can help.

Kentucky Divorce Laws and Business Ownership

Understanding how Kentucky divorce laws apply to businesses is key. Kentucky is an equitable distribution state. This means marital property is divided fairly, but not necessarily equally. You’ll need to determine if the business is non-marital or marital property. If you started the business before marriage, it may initially seem non-marital, but complications arise if:

  • The business increased in value during the marriage
  • Marital funds were invested in the business
  • The non-owner spouse contributed to the business directly or indirectly

Valuing a business during divorce requires professional input. This can include a market approach, comparing your business to similar businesses sold, or estimating future earnings and discounting them to present value. This can also be done by adding up tangible and intangible assets, minus liabilities.

Once the business is classified and valued, the court can decide how to divide the interests. A buyout allows one spouse to purchase the other’s share of the business. Selling the business entirely lets you divide the proceeds. In some cases, ex-spouses may continue to run the business together.

What to Expect When Your Kentucky Business Is in the Middle of a Divorce

While every divorce is unique, there are certain procedures you can expect to follow in each. If your business is involved in a divorce, you should be prepared for:

  • Financial disclosure: Both spouses must provide full financial disclosure, including income, assets, debt, and business records.
  • Business valuation process: A court-appointed or agreed-upon professional may evaluate the business to determine its worth. This includes a thorough review of the financials.
  • Negotiation and settlement: Most divorce cases settle before trial. A settlement agreement can determine how business interests are divided. This allows the owner-spouse to keep the business in exchange for other marital assets.
  • Court involvement: If a settlement fails, the court decides instead. Kentucky judges apply equitable distribution principles and consider factors, such as each spouse’s contribution to the marriage and business
  • Impact on business operations: Divorce can impact daily business operations. A proactive plan can help reassure stakeholders and protect business continuity.

Why Choose Stange Law Firm?

Not every divorce attorney has experience handling business-related issues. The team at Stange Law Firm understands the complexities of both family law and business ownership. We understand how Kentucky divorce laws impact business ownership and work diligently to protect your career.

Stange Law Firm collaborates with financial professionals, business valuation professionals, and tax advisors to ensure all angles of your case receive consideration. Whether negotiating a settlement or representing you in court, our team fights for your interests. Having the right law firm on your side can be one of the most effective ways to protect your business and secure your financial future.

FAQs

Q: Does My Wife Get Half of My Business if I Get Divorced?

A: Whether your wife receives half of your business in a divorce depends on how the business is classified and valued. In Kentucky, marital property is subject to equitable distribution, meaning the court divides it fairly but not always equally. If your business was started and grew significantly during the marriage, it may be considered marital property. A spouse may be entitled to a portion of the value, even if not directly involved in the day-to-day operations.

Q: Can I Sell My Business in the Middle of a Divorce?

A: Selling your business in the middle of divorce proceedings can get complicated and may require the court’s approval. Once the divorce is filed, automatic restraining orders typically prevent either spouse from selling or transferring significant assets without the other spouse’s permission. This rule ensures that marital property is preserved until division is determined. If you must sell, and the court allows it, proceeds may be treated as marital assets and subject to division.

Q: How Is a Business Valued During a Divorce?

A: During a divorce, businesses are typically valued using one of three methods. These include asset-based valuation, market-based comparison, and income-based valuation. Courts rely on forensic accountants or valuation professionals to assess assets. They also consider debts, cash flow, and market competition. The court may award one spouse ownership while granting the other financial compensation for their share of the property.

Q: What Is My Wife Entitled to in Divorce in Kentucky?

A: In Kentucky, a wife is entitled to an equitable share of marital property. This can include assets acquired during the marriage, including vehicles, real estate, and retirement accounts. Marital debts are also divided. She may seek alimony if there’s a significant financial imbalance after the separation. As for child custody, the state goes by what’s in the child’s interests rather than the gender of the parent.

Hire a Divorce Lawyer

Let the team at Stange Law Firm help you better understand what to expect when your Kentucky business is in the middle of a divorce. Contact us today to schedule a consultation.