What happens to a family business in a divorce in Bullitt or Hardin County Kentucky? Changes in the economy over the past decade and the pandemic itself have led to the creation of many new small and closely held family businesses. It is not uncommon for both or one of the former spouses to be involved in a family business or LLC. How can the company survive a divorce between co-owners or its sole owner and their spouse?
Business ownership will require substantial planning in any Shepherdsville or Elizabethtown divorce. There are several complex legal issues regarding:
- Preservation of existing and future operations
- Valuation of the business entity and the associated marital interest(s)
- Division of any marital interest in the business as part of the property settlement.
Disagreements over the valuation or appraisal of a family business in a divorce can become quite contentious and expensive. From a legal and financial point of view, there are substantial competing interests at stake. The spouse of the business owner wants the valuation of the company to be as high as possible. This increases the value of any marital interest, not to mention the amount the owner of the business must pay to acquire their former spouse’s marital interest in the company. The owner of the business wants the valuation to be as low as possible in order to make it less expensive to keep after the divorce.
Disputes over the marital interest in the business itself and how the business will be handled in property division can impact daily operations of the company and threaten long-term viability and Goodwill. It simply doesn’t have to be that way.
If both parties are actively involved in the business and earn their living from this work, it may be possible to simply continue the business without the need to go through valuation or appraisal. This will require former spouses to work cooperatively through the divorce itself and demonstrate the ability to work in close proximity after the divorce is completed.
The next option is for one of the former spouses to buy out the interest of the other. This will require a comprehensive valuation. Some aggressive interests will attempt to low-ball the value of the company in an attempt to buy out the marital property interest for an amount that is much lower than the actual value.
Be cautious – the Judge might reverse the tables on you and suggest (or order) that the interest be “sold” to your ex for the same value you or your attorney was claiming, in effect depriving you of fair value.
Another option is to sell the business and divide the proceeds.
John Schmidt is an experienced divorce and family law attorney based in Shepherdsville, Kentucky. The Law Offices of John Schmidt & Associates PLLC have more than 20 years of experience with the protection of financial and corporate interests in a family business in a divorce. We work with our clients to clearly understand their goals and objectives. We also work to preserve the integrity and operational viability of the business during the course of the divorce itself.
If you are considering a divorce and are concerned about a closely-held or family business we invite you to contact us via e-mail, schedule an appointment or call us today at (502) 509-1490 to get the answers you need to protect your business interests and other priorities in a divorce.
