Can I Keep My Small Business During a Divorce?
Even for families in relatively simple financial situations, divorce brings up questions about money. When one spouse owns a business or part of a business, financial considerations often become even more complicated.
Under the laws of the state of New York, courts divide marital property using a method known as equitable distribution. This means that a judge will try to find a fair way to divide the couple’s property depending on what each spouse contributed to the marriage and what their needs will be after a divorce. While equitable distribution aims for fairness, it doesn’t mean the division will necessarily be an even one.
When dividing property, a court looks only at the marital property. This includes most assets that were created or earned during the marriage; certain property owned before the marriage is considered separate and is excluded from the process.
If one of the spouses forms a business or gains interest in a business during the marriage, a court will consider this to be marital property, subject to splitting. When the spouse with the business interest wants to keep his or her company, arrangements can often be worked out. A judge may allow you to keep your business interest in exchange for a payment to your spouse known as a distributive award.
To help avoid the problems associated with valuing and dividing a business interest, you may wish to create a prenuptial or postnuptial agreement. These agreements allow you to specify how this asset will be treated and divided in the case of a divorce.
For help understanding tactics that may allow your business to survive a divorce, schedule a consultation with the dedicated family law attorneys at Jakubowski, Robertson, Maffei, Goldsmith & Tartaglia. We serve families throughout Long Island.