Is My Spouse Entitled to Half My Business During a Kentucky Divorce?
Kentucky law addresses the division of property during a divorce in a manner that is supposed to be fair and equitable. Appraisal and distribution of business assets and debts in a Kentucky divorce can be slightly intricate since the courts aim for a fair allocation, even if it is not strictly equal. Division of business interests during a divorce proceeding typically involves these three scenarios:
The court awards the business to the spouse with greater involvement in the business operations and grants fair and equitable compensation to the other spouse.
How Does the Court Decide on Compensation for Business Assets?
Often, the involvement of one spouse in the business operations is significantly more than the other. In a scenario along these lines, the court typically allocates the business setup to the spouse who has a closer association with the business operations.
It is more pragmatic during divorce proceedings to allocate the entire business operations to one spouse. At the same time, the court also needs to grant an equitable compensation to the other spouse for their share of the business venture.
To settle this fairly and to the satisfaction of both parties, the court needs to ascertain the accurate monetary worth of the business enterprise awarded to one spouse. A trained financial professional with proficiency in valuation for divorce settlements can help with the appraisal of a closely held business.
Who Determines the Fair Value of a Business Enterprise in a Divorce?
Qualified experts with specialization in divorce valuations can usually present a clearer picture of the true value of a business enterprise that is appropriate in such situations. Usually, a Certified Public Accountant (CPA) with an Accredited in Business Valuation (ABV) is called upon for these types of valuations.
The entire process of business valuation in divorce litigation can be time-consuming and expensive. Working closely with seasoned divorce attorneys with knowledge and experience in this field is very important for both parties.
Sometimes in a divorce settlement, the business assets might not be adequate to compensate a spouse fully and fairly for their share of the business. In such cases, the court may grant a claim against prospective future income from the business, to ensure that a spouse receives equitable compensation.
The court mandates the sale of business, and distribution of proceeds arising from such sale.
Under What Circumstances Does a Court Favor the Sale of a Business Operation?
In some instances, the court may decide to call for the sale of the business. The circumstances under which the court is more likely to make such a decision are:
- Where neither spouse is willing to continue running the business operations.
- Where one or both spouses wish to continue with the business but the currently available assets and anticipated future earnings of the business are not adequate to provide just and fair compensation for the spouse who would forego the business.
The court favors the continuation of the business and its joint operation by both parties.
Under What Circumstances Does Court Allow Joint Business Operations?
In cases where both the spouses have, to a large extent, a comparably equal level of engagement and association with the business operations; the court may decide to have both spouses jointly retain and operate the business.
For this to happen, both parties must be able to establish in court that their future involvement is crucial to carry on running the business operations successfully. They must also be able to continue to be business partners despite not being life partners any longer.
How a Prenuptial Agreement Can Prevent a Lot of Turmoil in a Divorce
A prenuptial agreement is a contract between two individuals wishing to marry each other. The contract can describe in detail the processbehind the valuation and distribution of business assets in the eventuality of their divorce. Signing a prenup implies that the about-to-be-married couple agrees to mutually acceptable conditions for an equitable division of businesses and other marital assets, in case they decide to part ways and file for divorce.
A married couple can avoid and avert all the doubts and questions, and the accompanying turmoil surrounding the division of assets with a prenuptial agreement. If one or both spouses start a business after their wedding, they can take the same action with a postnuptial agreement.
Contact an Experienced Property Division Attorney in Kentucky
Division of business interests and assets can present a challenge during divorce proceedings. You will need the services of an accomplished and skilled divorce attorney who is well-versed with the complex technicalities of such fact-dependent legal disputes.
If you are in this situation, speak with a seasoned divorce attorney at the law offices of John H. Ruby & Associates in Kentucky. We can help safeguard your rights and protect your interests by helping you handle the business division in your divorce case. Call us today at (502) 895-2626 for a free, no-obligation consultation.