One of the hardest aspects of a divorce is dividing your lives into two separate entities. This means separating everything, which may include your business. Even if your spouse had nothing to do with running your business, he or she may still have a claim to at least part of it. Property division laws in Kentucky follow the concept of equitable distribution, which means that anything you obtain during the marriage becomes property of you and your spouse.
According to Forbes, starting your business before your marriage does not exclude it from becoming marital property. While the whole business may not qualify as marital property, portions of it likely will if you do certain things.
Your spouse working in the business
If your spouse contributes any time to the business, then he or she has a claim to it in at least some portion. The only way to prevent this is to treat your spouse like any other employee. You should pay him or her a fair salary and not give any special privileges to him or her.
Investments
If you make investments in your business during your marriage that add value to the business, then the added value becomes marital property. This is very difficult to avoid doing because, in general, any income you earn during your marriage becomes marital property. So, if you take money you earn and invest it in the business, then you are comingling marital and non-marital property.
It is very difficult to avoid making your business marital property. The best solution is to create a prenuptial agreement or a business contract that outlines what will happen if you divorce.
Is Your Business At Risk? Protect Your Legacy!
Divorce can be overwhelming, especially when there’s a business involved that you’ve worked so hard to create. Don’t let divorce threaten its future. While a prenup or business contract is the best defense, it’s not too late to take action during a divorce. Our Louisville divorce attorneys have experience helping business owners protect their company they’ve worked so hard to build. Protect your legacy by calling our attorneys today at 502-996-8069 or through our contact form.