When it comes to divorce, New York is an equitable distribution state. This means that marital assets have to be divided fairly, although this oftentimes doesn’t equate to an equal division. This can make the process complicated, especially when a business is involved. Although the difficulties that arise with property division in these circumstance might tempt you to shut down and let the process simply run its course, doing so can leave you at a financial disadvantage post-divorce.
Therefore, as you prepare to head into your divorce, whether it’ll include settlement talks or contentious litigation, you need to know how to address property division in your case, particularly as it relates to your business assets.
How to address business assets in your divorce’s property division process
Your business has a lot of assets and probably a lot of value. As such, you want to make sure that you’re protecting your interests as much as possible. So, as you prepare to move forward with your divorce case, here are some key considerations that you’ll want to keep in mind:
- Not all businesses are marital property: Remember, only marital assets are subjected to property division. Therefore, you might want to see if there’s a way that you can argue that your business is separately owned and thus outside the confines of your divorce. This determination is going to depend on a number of factors, including when the business was started or acquired, how profits from the business were used, and any contributions that your spouse made toward the business.
- There are various ways to valuate your business: If your business is going to be subjected to division, then you’ll want to ensure that its value is accurately determined before it’s split with your spouse. But there are multiple methods of determining a business’s value, including looking at its earnings capacity and its comparable market value. Educate yourself about these methodologies so that you can choose the one that’s right for you.
- You have options for your business’s future: Going into your divorce, you’ll need to know what you want for the future of your business. If you simply want to rid yourself of the business, then you should prepare yourself to sell it and divide the proceeds with your spouse. If, on the other hand, you want to keep the business running, then you’ll want to think about what you want that to look like. Do you simply want to buyout your spouse so that you keep the business in full? Or are you going to be in a position where your spouse ends up with an ownership stake in the business?
Be prepared to address your business in your divorce
Of course, if your business ends up being subjected to division, then there are several factors that will be taken into consideration to determine exactly how the business will be split. Here are some of them:
- When the business was acquired
- How your spouse contributed to the business
- To what extent the spouse contributed to the business
- Your spouse’s involvement in the business’s operations
- Whether money was borrowed from your spouse or their family to help get the business up and running or survive in tough times
- How other marital assets will be divided
As you can see, there’s a lot that goes into the property division process when a business is implicated. If you want to fully protect your interests, then you need to head into the process fully prepared. This means having a full understanding of your business’s assets and how the law applies to your set of circumstances. By putting in the necessary work on the front end of your case, you’ll be better positioned to obtain the outcome that you want and secure the future that you deserve.