When facing a divorce, one of the most pressing concerns for business owners is whether their spouse could end up with a share of their business. If you’re a business owner going through a divorce, please continue reading and reach out to our seasoned Long Island divorce lawyers to learn how the equitable distribution process works in NYS and how we can help protect your assets. Here are some of the questions you may have:
How Are Business Assets Treated in a Divorce?
In New York State, marital property is divided according to the principle of equitable distribution, which aims for a fair, though not necessarily equal, division of assets. Any business interests acquired during the marriage are generally considered marital property. However, if the business was established before the marriage, its treatment in a divorce becomes more nuanced.
For example, the business’s increase in value during the marriage may be subject to division. Factors such as the non-owner spouse’s contributions to the business, whether directly or indirectly, are often considered. Did they support you financially while you built the business? Did they assist with operations, even in informal ways? The court examines these contributions to determine what, if any, portion of the business the non-owner spouse may be entitled to.
What Determines How Much My Spouse Could Get?
Several factors influence the division of a business in divorce proceedings. First, the court will assess whether the business is marital property, separate property, or a mix of both. Even if the business itself is deemed separate property, its appreciation in value during the marriage could be considered marital property, particularly if the growth was due to marital efforts or shared resources.
Next, the court evaluates the value of the business. A professional business appraiser is often brought in to provide an unbiased valuation. This valuation helps the court determine whether the business can be divided or if other assets can be allocated to compensate the non-owner spouse.
Additionally, courts will weigh practical considerations. For instance, splitting a business in two is often impractical, especially if both spouses lack the skills to run it. More commonly, the court may award the business to the owning spouse and grant the non-owner spouse a financial settlement to balance the scales.
How Can I Protect My Business During a Divorce?
Protecting your business starts long before divorce is on the horizon. For instance, prenuptial or postnuptial agreements can specify how business assets will be handled in the event of a divorce. If you’re already married without such an agreement, consider implementing measures to keep your business assets distinct from marital assets. This might involve avoiding commingling funds or maintaining clear, separate financial records for the business.
Finally, if you’re going through a divorce, the best line of defense is hiring a team of skilled family law attorneys to represent you. Sklavos Law Group, PC is here to help. Contact us today.
