It takes a lot to own a small business. Many small business owners pour their life savings and countless hours into their business, only to have to share it with their ex-spouse in the divorce. Kentucky is an equitable distribution state, meaning that any property acquired during the marriage is considered marital property. Businesses started during the course of the marriage, and businesses started prior to the marriage but that increase in value during the marriage, may also be considered marital property and can be divided between the two spouses in a divorce.
There are a few ways you can protect your business before you even start thinking about divorce. You can:
- List the business as separate property in your prenuptial or postnuptial agreement.
- Limit your spouse’s involvement in the business.
- Waive your spouse’s rights to the business through a provision in your partnership agreement, shareholder agreement, etc.
- Create an irrevocable trust and put the business in the trust. Since the trust is the owner of the business, not you, the business will not count as marital property.
- Avoid using marital funds to contribute to the business and pay yourself a reasonable salary.
If you have already decided to divorce your spouse, you can:
- Schedule an expert to value your business.
- Give up other assets in order to keep your business.
- Agree to buy out your spouse’s interest in the business
- Sell the business and split the proceeds with your spouse.
Business owners can protect their finances as well as the business they worked so hard to build by consulting with a divorce attorney as soon as possible. An attorney can guide your throughout the property division process and look out for your best interests.