Can a Divorce Impact my Business?
Divorce is often one of the toughest chapters in a person’s life. Nobody ever imagines they will get a divorce, but they happen, and when they do, it is always best to be prepared. When couples do not draft a prenuptial agreement or otherwise, their divorce will very often be subjected to the litigation process. This is generally an emotionally and financially draining period of time, and this stress can be even further compounded if one or both spouses own a business. If you are getting a divorce and believe your business may be at stake, here are some of the questions you may have:
What is the difference between marital or separate property?
In a contested divorce, marital property is usually divided equitably. Separate property is defined as the following:
- Inherited assets
- Assets obtained prior to marriage
- Gifted assets
- Assets that are designated as separate in a written agreement
How will valuation affect my business?
As with all other marital property, if a business does not fall under separate property, it will be divided equitably. However, “equitable” does not necessarily mean “equally.” Instead, “equitable” is what the court determines is fair and just for both parties involved. When it is determined that a business is marital property, financial experts will analyze your bookkeeping and business records. There may be additional court-ordered inquiries regarding your business practices and expenses, and if you do not submit this information truthfully and accurately, you may be subject to an investigation by the Internal Revenue Service.
How can I protect my Long Island business?
Fortunately, there are a few actions you may take to protect your business from equitable distribution. For example, you and your spouse may draft a shareholder agreement if your business is jointly owned. This agreement can value each party’s interest in the company, assign ownership in the event of a divorce, and it can restrict the transfer of ownership to someone else.
You and your spouse-to-be may also draft a prenuptial agreement before you are married, where you can outline the terms of your divorce, should one ever occur. However, if you are already married and have not drafted a prenuptial agreement, you are not out of luck–you may still draft a postnuptial agreement. A postnuptial agreement functions essentially the same as a prenuptial agreement, though it is drafted after your marriage is already official. If you and your spouse or spouse-to-be are interested in drafting one of these documents, do not hesitate to reach out to our compassionate and knowledgeable firm.
Contact our experienced Nassau County firm
The Pollack Law Firm, P.C., serving clients in Nassau and Suffolk County, is always available to assist and represent parties in divorce and all other matrimonial and family law matters. Please call today to schedule a free consultation: (516) 938-333.