What Are Some Ways to Handle Dividing a Family Business in a Divorce?
A divorce has an impact on much more than simply your relationship status. A divorce can change where you live, your standard of living, and even alter your professional life. If you’re the owner of a small business, that business may be considered marital property to be divided equitably in a split. If you are considering a divorce, speak with a family law attorney as soon as possible about options regarding your small business.
Whether or not your small business will be considered property of the marriage or your own separate property depends on several factors. The basic rule is that businesses which were started prior to your marriage with your own funds are considered separate property. That said, such small businesses can be changed into marital property if you used marital funds to operate the business. Additionally, if your spouse worked to bolster the business in any way, or if your spouse made major sacrifices to support the growth of the business, these could also be considered contributions to the value of the business, making your spouse entitled to a share of its value. Provided that the business is considered marital property, the family court hearing your divorce will include it in the marital estate, which will be equitably divided in the divorce.
That said, there are strategies and arguments that a skilled family law attorney can employ in order to allow you to hold onto the business if you are the primary operator. For example, even before divorce is on the table, small business owners should consider creating a post-nuptial agreement which provides that the spouse who started the business remains its sole owner and operator in the event of a divorce. If your spouse does not wish to sign such an agreement, or if you have already begun the process of separating, you may want to consider other alternatives to hold onto your business in a divorce. For example, consider using other property in the marital estate to cover the value of the share of the business to which your spouse would have been entitled. You can also pay out your ex’s share of the business in installments over time. In order to avoid selling off the business you’ve worked hard to create, some former spouses manage to operate a business together, often while seeking a neutral third party to act as a go-between. Many couples are forced to resort to selling the family business upon divorcing, but with some advanced planning, this result may be avoidable.
For assistance with your divorce in New York, contact the experienced and detail-oriented Hudson Valley family law attorneys at Rusk, Wadlin, Heppner & Martuscello for assistance with your case, at 845-236-4411 (Marlboro), or 845-331-4100 (Kingston).