Owning, running or being a majority shareholder of a business comes with its own unique set of pressures. Divorce can put even more stress on people in this position. Understanding how one’s business and divorce might impact one another is an important step to protecting both business and personal interests.
Marital property must be divided during divorce, so it is best to keep joint finances as far away from one’s business as possible. Using marital funds to invest in a business can blur the line between what is joint property and what is separate. If this happens, then a business owner could stand to lose a significant portion of his or her business interests during a divorce.
Although it may feel counterintuitive, it is also a good idea to pay one’s self a decent salary. Many business owners instinctively take a reduced salary in order to maintain liquidity in their businesses. By doing so, business owners leave themselves vulnerable should they be on the hook for paying out a sizable divorce settlement, as they will not have easy access to personal funds.
Of course, it is also important to remember that one’s income also impacts any child or spousal support order. Weighing the potential benefits and drawbacks of actions such as taking a larger salary is a good step to take as early on in the divorce process as possible, maybe even before filing. There are many other considerations that must be taken into account though, so Kentucky business owners may be well advised to speak with an experienced attorney about their options.