The first step for Kentucky couples who need to divide their business in a divorce is to have it valuated. Once they know what the company is worth, they can decide whether they want to sell, keep or split the business.
Selling may seem like an easy way to get rid of the business if neither person is interested in continuing to run it, but this can actually introduce some complexities. If the business does not sell right away, it might be necessary to decide how they will run it in the interim and whether they will both stay on. This could also delay the divorce process. Some couples may decide to simply keep the business, but many people who are getting a divorce are unable to work together effectively.
The most popular option is for one person to buy the other one out. With a direct purchase of shares, this is usually not taxable. If one spouse lacks the assets to make a direct purchase, it could be done using a settlement note. In a situation in which both people own shares, the company could purchase one spouse’s shares. However, it is important to be mindful of capital gains tax.
High-asset couples who divorce may face other challenges when it comes to property division. For example, if there is a valuable art collection, the appraisal process can be time-consuming if each person has an appraiser because they may disagree. Pension plans and 401(k)s require a complex document called a qualified domestic relations order for division in a divorce. Selling other types of property could also result in capital gains taxes. If the couple owns one or more homes, it could take some time for them to sell just as with a business. Attorneys may be able to assist in these negotiations.
Selling may seem like an easy way to get rid of the business if neither person is interested in continuing to run it, but this can actually introduce some complexities. If the business does not sell right away, it might be necessary to decide how they will run it in the interim and whether they will both stay on. This could also delay the divorce process. Some couples may decide to simply keep the business, but many people who are getting a divorce are unable to work together effectively.
The most popular option is for one person to buy the other one out. With a direct purchase of shares, this is usually not taxable. If one spouse lacks the assets to make a direct purchase, it could be done using a settlement note. In a situation in which both people own shares, the company could purchase one spouse’s shares. However, it is important to be mindful of capital gains tax.
High-asset couples who divorce may face other challenges when it comes to property division. For example, if there is a valuable art collection, the appraisal process can be time-consuming if each person has an appraiser because they may disagree. Pension plans and 401(k)s require a complex document called a qualified domestic relations order for division in a divorce. Selling other types of property could also result in capital gains taxes. If the couple owns one or more homes, it could take some time for them to sell just as with a business. Attorneys may be able to assist in these negotiations.
