Divorce can be trying for anyone. However, small business owners must be amply prepared before filing for divorce in New York City in order to protect their company, assets and employees.
You may have considered that certain property, like the house, would be fair game and that your debts may be divided with you paying the larger share.
However, your business interest could be considered a piece of property that could be at risk for division in your divorce, and if you hope to protect it, you need to consult with an experienced divorce lawyer - preferably before you file. Even if the business itself may not be up for grabs, the value of it could be considered by the judge when determining how to split up your property.
This is true even when your spouse has no ownership interest in the firm and even if he or she knows virtually nothing about what you even do.
It's not that the non-business-owning spouse somehow becomes part-owner. Rather, the entrepreneurial spouse may end up owing the other for a portion of the business interest.
Some company owners make the mistake of assuming that just because the spouse was not involved (or minimally involved) in building the business or the day-to-day operations that they don't have a stake in the firm. Legally, as far as divorce is concerned, this may not be true. Several factors will be considered, including how long you have been married, what sacrifices your spouse may have had to make while you grew the company and whether he or she did have any direct involvement.
New York is an equitable distribution state, which means the court will be responsible for determining an asset division schedule that is most fair. Bear in mind that "equitable" doesn't mean "equal," and this is true for your business interests as well.
The particular method of valuation of your company or your interest in the company will vary on a case-by-case basis. The court is going to look at the book value of the firm, its income approach and its market value.
The process for determining a company's value tends to be quite complex.Typically, your attorney will guide you to experts in the field who focus on this specific kind of forensic financial work. While this can sometimes get pricey, a lot of times, these individuals can help in the process of divorce settlement negotiations - which keeps you out of court and significantly drives down the overall cost of the process.
While you and your soon-to-be-ex could hire separate financial experts, you might be able to further reduce expenses by hiring a single "neutral" expert who can help you reach a fair conclusion.
Your attorney can help you do a preliminary evaluation of the firm and other assets to help you figure out the most cost-effective approach to preserving your business interests during the divorce proceedings.
If you are a small business owner contemplating divorce in New York City, call our offices at (718) 864-2011.
Business owners and divorce, Feb. 3, 2014, By Christopher H. Macturk, The Richmond Times-Dispatch
More Blog Entries:
Benefits of a Prenuptial Agreement in Brooklyn, Feb. 5, 2014, New York City Divorce Lawyer Blog