Kentucky divorce courts generally divide a family business under the Bluegrass State’s equitable distribution system, which means each individual receives his or her fair portion. A company started during a marriage legally belongs to both spouses, and during a divorce, you may have a right to a portion of its income or fair market value. If you operated the business together with your ex-spouse or spent time working at it by yourself, these factors may determine your ownership and fair compensation.
When an individual starts a company before getting married, however, the law recognizes it as his or her own separate property. A business received as a gift or an inheritance also qualifies as separate property. Unless an agreement specifies otherwise, an ex-spouse does not have a legal right to an individual’s separate business during a divorce.
A Kentucky resident and founder of a nationwide pizza restaurant chain already owned his company for three years before he married his wife in 1987. She recently filed for a divorce citing an “irretrievably broken” marriage. As reported by Louisville Business First, a mutually agreed-upon property settlement will determine the division of the business.
According to the Kentucky Secretary of State’s website, a listing shows the woman is the owner of one of the pizza chain’s franchises located in Louisville. Because this franchise is her own separate company, she may keep it for herself without interference from an ex-spouse and without the need for a property settlement agreement.
Many couples mistakenly believe they will each receive an equal share of all property during a divorce, but splitting up a business could come with complications. Depending on when the company started, you may or may not have a legal right to receiving some form of compensation from it.
The information provided is for educational purposes only and not intended as legal advice.