Some entrepreneurs in Kentucky may want to take steps to protect their business holdings in case of divorce. One way to do this is with a prenuptial or postnuptial agreement.
Neither a prenup or postnup will necessarily allow a business owner to keep the entire company. Instead, it can be a way of making an equitable agreement about the business. One option is to specify that the business is the distinct property of the owner, but the agreement can also specify that the spouse will get a share of the business’s value after marriage. The business might also be run as an equal partnership. This could allow one person to buy out the other. If the couple can get along, they might agree to continue running the business even after divorce.
Without a prenup, an entrepreneur can still establish a company as a sole property. If the formation documents are created properly, the nontitled spouse could get a cash payout in lieu of ownership.
There are certain steps a business owner should take to clearly establish the financial parameters of the company. For example, sources of capital, cash transactions and business and personal expenses should be clearly documented. Those who pay themselves a salary from a business that is well below market value might still be required to consider the market value when determining spousal support.
Dividing a business can be one of the more complicated elements of property division in a divorce; although, other assets can lead to complications in division as well. For example, if a couple must divide a 401(k) or a pension, they will need a document called a qualified domestic relations order. This must be prepared carefully in accordance with the rules of the retirement plan. An attorney could help a divorcing spouse with this process.