Divorcing in New York? How to Keep Your Business Protected
Divorce is never easy, but when you own a business, the stakes become even higher. In New York, business assets are often subject to equitable distribution, which means they could be divided between spouses. If you're a business owner facing divorce, understanding how to protect your business is crucial for preserving your livelihood and future.
Is Your Business Marital or Separate Property?
One of the first steps is determining whether your business is considered marital property or separate property. In New York:
Separate Property includes assets acquired before marriage, inheritances, or gifts.
Marital Property includes assets acquired during the marriage, including businesses that were started or significantly grew during the marriage.
Even if you founded the business before marriage, any increase in value during the marriage could be considered marital property subject to division.
Strategies to Protect Your Business
Prenuptial and Postnuptial Agreements
A well-drafted prenuptial or postnuptial agreement can clearly outline how the business will be treated in the event of a divorce. This is one of the most effective ways to safeguard your business.
Shareholder or Operating Agreements
For businesses with multiple owners, including divorce provisions in shareholder or operating agreements can protect the company from forced ownership transfers or valuation disputes.
Buy-Sell Agreements
Buy-sell agreements can preemptively address how ownership interests will be handled if a divorce occurs, allowing remaining partners to buy out the divorcing owner’s interest.
Business Valuation in Divorce
If your business is considered marital property, it must be assigned a fair market value. This process can be complex and often requires:
Forensic accountants
Business valuation experts
Review of financial records, goodwill, and projected earnings
Accurate valuation is critical to ensuring a fair settlement.
Negotiating a Settlement to Keep Your Business
In many cases, the goal is to retain full ownership of your business. Strategies may include:
Offering other assets (like real estate or retirement accounts) in exchange for the business interest.
Structuring spousal support payments that ease cash flow burdens on the business.
Legal Guidance is Essential
Navigating a divorce as a business owner requires strategic planning and skilled legal representation. An experienced family law attorney can help you:
Develop a strategy to protect your business assets
Work with valuation experts
Negotiate settlements that prioritize your business continuity
Draft legally sound agreements to prevent future disputes
Conclusion
If you’re a business owner facing divorce, proactive legal counsel can make the difference between a damaging asset division and a negotiated solution that safeguards your business. At The Schreck Law Group, we specialize in guiding entrepreneurs and business owners through complex divorces with a focus on protecting what matters most. Contact us today!