A common concern among business owners is how the business itself will be handled in a divorce. You may wonder “Will I have to sell my business because of our divorce?”
Business valuation and the division of the marital property interest in a Louisville area divorce case are very complex legal issues. The business, tax and family law experience and legal skill our Dodd & Dodd attorneys bring to your case is crucial in a divorce involving professional practice or business ownership.
The short answer to the question “Will I have to sell my business because of our divorce?” is “No, most businesses do not have to be sold simply because of a divorce.” The impact of a divorce on your business is limited to the marital property interest in your company. If you started or acquired your business during the course of your marriage, the “marital property” (joint interests of you and your former spouse) will have an interest in the company or practice. That interest must be divided during the course of the divorce.
This begins with a valuation of the business interest. Once the actual value of the interest is determined we must calculate the “marital property” interest in that valuation. Marital property is usually divided fairly equally between both spouses.
Let’s use a simple example where the value of the ownership interest in the business was $200,000. If 100% of this interest is considered to be marital property and the division is to be 50%/50% your spouse would have $100,000 in equity in the business. You must offset this with another asset in order to keep the full interest in the business going forward. You might exchange an additional $100k in the equity of your family home or from a retirement account in order to offset their “marital” ownership interest in the business.
These are complex calculations and the legal process involved in these cases requires extensive skill and expertise. If you are concerned about business ownership in a Louisville or Jefferson County divorce we invite you to contact us or call 502-584-1108 to schedule an appointment with one of our experienced attorneys.
