Dividing a business can be one of the more difficult elements of divorce for people in Kentucky. First, it is necessary to determine the value of the business. Then a couple must decide whether one person will buy the other one out, if they will keep on running the business together or whether they will sell the company.
Most couples opt for one spouse to keep the business, which is a straightforward process if there is a direct purchase of shares. This is considered to not be a taxable event most of the time since it is related to divorce. However, a spouse who is not able to make this direct purchase might need to use a settlement note, or the company might purchase shares from the spouse who is leaving the company. This requires making sure the sale is structured to minimize capital gains taxes.
Keeping the business works for some couples, but it does require a high level of cooperation. Some couples may imagine they will be able to do this and find it is not the case. The other option is selling the business. This may seem like an easy way to cut financial ties, but it is not always quick. Spouses may need to negotiate how they will handle the company before it is sold, including whether one or both parties will remain involved.
There are other potential complexities of divorce. For example, a document called a qualified domestic relations order must be prepared and approved by the pension or 401(k) plan administrator before those assets can be divided. For divorcing couples who are also parents, negotiating child custody may be the most difficult and complex element of all due to the emotional factors involved. It may help parents to stay focused on the children's best interests during these negotiations.