Owning a business can make divorce more complicated because the business may represent both your livelihood and a significant marital asset. If you or your spouse owns a business, you may wonder whether you could lose your share or whether your spouse could claim part of what you built.
Here is what you should know about the ways a business can factor into your divorce.
The business may count as marital property
When you or your spouse starts or acquires a business during the marriage, the ownership interest generally falls within the property that Kentucky considers when dividing marital assets. Putting the business in only one spouse’s name does not automatically keep it outside the marital estate.
A business that predates the marriage may receive different treatment, although changes in its value during the marriage can still matter.
The business may add value to the marital estate
The court may need to establish the business’s value before determining how it fits into the overall property division. That process can involve looking at things such as:
- What the business owns and owes
- How much income it generates
- Its overall financial worth
The resulting value does not necessarily mean you must sell the company or give your spouse an ownership stake. Instead, it gives the court a basis for accounting for the business alongside the couple’s other property.
One spouse may keep the business
You may keep the business after divorce while your spouse receives other marital assets to balance the overall division. Kentucky law directs courts to consider each spouse’s contributions, the property each spouse receives and each spouse’s circumstances when dividing marital property. The length of the marriage also factors into that decision.
Spouses may choose to sell or divide the business
Selling the company or separating the ownership interest can provide another way to resolve the business’s value. The circumstances surrounding the company, including its ownership arrangement and financial condition, can affect which option makes sense for the divorce.
Know how your business may affect your divorce
A business can affect the division of property as well as your financial future after divorce. If you or your spouse owns a company, consider reviewing its ownership records, financial information and history with an attorney before agreeing to a property settlement. That review can help you understand what your business interest could mean for the rest of your divorce.