When divorcing, assets accumulated during the marriage will be subject to equitable distribution. Essentially, this means your marital property will be divided fairly between each spouse. However, that does not necessarily mean an equal split of marital assets. That being said, many couples that share a business with their spouse wonder what will happen to their business in a divorce. Keep reading to learn how a divorce is different when spouses own a business together. In addition, please contact an adept Rockland County Property Distribution Attorney who can help you protect your hard-earned assets during property distribution.
What will happen to my business after a divorce?
What happens to your business during a divorce ultimately depends on whether the court considers the business separate or marital property. If it is considered a marital asset, the business will be subject to equitable distribution. New York is an equitable distribution state which means any assets that were accumulated during the marriage are to be divided fairly between the divorcing couple. However, this does not necessarily mean the martial assets will be divided in an even 50/50 split. Therefore, if the court deems it reasonable, it can award a larger share of the couple’s marital assets to one spouse. When determining whether a business is subject to equitable distribution, the court will look at when the business was established and whether it increased its overall value during the marriage.
In most cases, if the business was acquired outside of the marriage, or was acquired as an inheritance or gift, it is considered separate property. If this is the case and one spouse has no direct financial involvement in the business, the uninvolved spouse may be entitled to a percentage of the business’s earnings or an equitable reward for critical contributions to the business’s success. However, if the business was acquired during the marriage and both spouses have direct financial involvement in the business, it will be considered marital property. Therefore, it will be subject to equitable distribution, meaning it will be divided equitably between the divorcing couple.
It is important to note that just because your marriage has ended that does not mean your business relationship has to end. If your business is valued highly, you may want to consider preserving the business. The best way to shield your business from the consequences of a divorce is by creating a prenuptial or postnuptial agreement. With these legal contracts, you can dictate how your business will be split and distributed in the event your marriage fails.
If you are seeking a divorce and share a business with your ex, you need a determined Rockland County property distribution attorney on your side. Understandably, divorcing while sharing a business with your former spouse is different from a traditional divorce as there is more at stake as you put your blood, sweat, and tears into building a successful business. Don’t navigate this process alone. Our firm is prepared to help you navigate this intricate legal process to achieve favorable results.