If you are getting a divorce and you are a business owner, you may be wondering what will happen to your business throughout this process. Continue reading to learn the impacts of a divorce on a business. Reach out to our experienced divorce attorney if you have any further questions or require assistance with your legal matters.
Will my business be considered marital or separate property?
Separate property is considered gifted assets, inherited assets, assets that are designated as separate in a written agreement, or assets obtained prior to marriage. Courts will determine if your business is marital or separate property. If the business does not fall under separate property, the courts will consider it part of the marital property. This means that it be equitably distributed. The term “equitable” does not necessarily mean “equal,” rather, it means a fair distribution in the eyes of the court. The court will examine the following factors and more to determine how it will be divided in a way that is fair to both parties:
- The length of your marriage
- Whether a spouse contributed to the education, training, or earning power of another spouse
- Your marital standard of living
- The value of your property
- Debts and liabilities
- Your property, as well as income
- Property settlement agreements
How will my business be valued?
Courts will have financial experts analyze various business records to assess how your business should be valued. The court may also ask for information from you which must be provided accurately and truthfully. It is important to understand that if there are any discrepancies in the information you provide regarding your business, they will be reported to the IRS.
How can I protect my business?
It is possible to decide in writing what will happen to your business in a divorce in a shareholder agreement. These agreements allow you to assign ownership and detail how each party’s interest in the company is valued. You will also be able to limit the transfer of ownership to another party. Another way to protect your business is by drafting a prenuptial agreement before the marriage and outline what will happen to your business in the event of a divorce. If you are already married, you may want to consider drafting a postnuptial agreement to serve the same purpose after you are married.
CONTACT OUR EXPERIENCED NEW YORK FIRM
Barrows Levy PLLC is a highly experienced New York law firm focused on providing quality legal services to clients in New York City and Long Island. If you need a Nassau County lawyer who has significant experience handling family and estate planning matters, we are ready to help. Contact Barrows Levy PLLC to schedule a consultation with one of our experienced attorneys today.