How is an interest in a business or professional practice divided in a Louisville divorce? How do you establish and then ultimately divide the marital interest in a business or professional practice in a Louisville divorce case? In these cases, a “valuation” of the business or professional practice must be established in Court. Once the valuation is established, the marital property interest in the business or professional practice is divided (as well as all other assets and debts of the couple).
One of the keys in the process of dividing business ownership interests in a Louisville divorce is the date when the business or practice was formed or acquired. If the business was acquired prior to the marriage it could be considered to be “separate property” and will not be affected by the divorce.
If the business ownership interest was obtained during the course of the marriage the present value of the business must be established, so that marital property interests in the company or practice can be divided. If one party intends to retain ownership, the spouse who owns the business is usually required to compensate the other spouse for that party’s portion of the marital property interest of the business.
The valuation and ultimate disposition of a family business in which both spouses participate can be quite complex. Will one of the spouses buy the other out, or will both parties continue to operate the business? Is it in everyone’s best interest to just sell the business and divide the proceeds?
In most cases, a full valuation of a business or professional practice must be established through the expert testimony of external witnesses. Establishing the valuation of any business ownership interest or professional practice includes many factors such as the market value of “what a willing buyer would pay to a willing seller if there is no compulsion on either party to conclude the transaction.” It must also consider “goodwill” or the “probability that the business will continue in the future as in the past, adding to the profits of the concern and contributing to the means of meeting its engagements as they come in.” This must be taken into consideration before a judge can order the marital interest of a business or professional practice divided in a Louisville divorce.
Our experienced Louisville divorce attorneys have decades of expertise in these matters. If you are involved in a Louisville divorce and either former spouse owns an interest in a professional practice or business both parties should be represented by their own attorney. We invite you contact us or call (502) 584-1108 to schedule an appointment with one of our attorneys.