Divorce Attorneys When a Business is Involved in Long Island
Protecting our client’s rights and business in Nassau and Suffolk County
When couples get a divorce, marital assets and property are often contested between parties. In some cases, a business may be involved in the divorce case. Whether a couple works together, one owns the business while the other takes care of the home, or one owns the business and the other works separately, the business entity will most likely be taken into consideration when distributing assets, unless agreed upon in writing. When a marriage dissolves and the split of marital assets are contested, the court must judge according to New York law.
Is a business marital or separate property?
Courts must decide if the business is marital and separate property. Separate property is considered:
- Assets obtained prior to marriage
- Inherited assets
- Gifted assets
- Assets that are designated as separate in a written agreement
If the business does not fall under separate property, New York courts will consider it part of the marital property to be equitably distributed. Equitable does not always mean “even”, but what is fair and just for both parties. Sometimes, the couple has worked together towards one goal of having a successful business. Sometimes, one spouse has stayed home to take care of children while the other cares for the business. In other circumstances, the other spouse worked another job or the success of the business allowed them not to work at all. Whatever the situation, if the business is marital property, it may be a part of the case.
How valuation affects Long Island businesses
If the business falls under marital property and the case is contested, the business, along with any other marital property, with be valued. The business owner must consider the burden of the inquiry. Financial experts will examine the bookkeeping and records of the business. There may be court-ordered inquiries about business practices and expenses. Financial documents may be required in order to value the business. These inquiries come with the risk of confidential information circulating and financial discrepancies being reported to the Internal Revenue Service.
Ways to protect a business
Whether a business is jointly owned or one spouse bringing it into the marriage as marital property, the business is at risk when divorce becomes a reality. The stress and financial burden of a divorce may affect the owner’s or owners’ ability to run the business, possibly leading to a degradation of profitability, productivity, and employee morale.
If the business is jointly owned, the spouses have the option to draft a shareholder agreement. This agreement will detail provisions that establish the mechanisms for valuing each party’s interest in the company. It can assign ownership in the case of divorce and restrict transfer of ownership to someone else. Business owners can also consider drafting a prenuptial or postnuptial agreement that details what would happen to the business in case of a divorce. These options would save the parties court costs and the stress of having the business scrutinized by financial experts, allowing for the couple to work out other differences and possibly conclude with an uncontested divorce.
Contact a Long Island divorce law firm to protect your business
If you are a business owner or the spouse of one, you have a lot to consider. The Pollack Law Firm, P.C. is committed to ending your legal matter in the best way possible. We understand you have worked hard for your business or supported a spouse in their venture. You deserve attorneys who will work diligently for your cause and have your best interests in mind. The Long Island divorce attorneys at The Pollack Law Firm, P.C. are experienced, dedicated, and persistent. Call us for a consultation.