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3 ways to divide a business in a divorce

On Behalf of | Jan 6, 2022 | Divorce

Kentucky is an equitable distribution state, which means that you and your spouse each get a share of what you own together, but it is not necessarily a 50-50 split.

Some assets are easier to divide than others. For example, if you own a business together, you cannot just split it up. Nevertheless, according to Forbes, there are still ways to divide the property.

1. Sale

You and your spouse can sell the business to someone else and split the profits between the two of you. The downside of this option is that the time it takes to complete the transaction can prolong the process of divorce. On the upside, selling the business allows both you and your ex-spouse the freedom to pursue your own interests once you receive the proceeds from the sale.

2. Buyout

Either you or your spouse may bear more responsibility for running the business than the other. If this is the case, you can have the business appraised, and either you or your spouse can buy out the other’s interest in it and take full ownership of the company. This is most straightforward when one spouse has liquid assets to make an outright purchase of the other’s interest. If not, a buyout is still possible but more complex.

3. Shared ownership

The third option is for you and your spouse to remain business partners following your divorce. Your personal relationship ends, but your business relationship undergoes no change, at least in theory. In practice, it can be difficult to separate your professional relationship from personal matters. Unsurprisingly, few couples choose this option compared to the other two.

If a court deems the business to be separate property, it is not subject to property division. Nevertheless, even if you or your spouse owned the business prior to your marriage, its separate status is not always certain.