How to Protect Your Business During a Divorce
Divorce forces parting spouses to address a significant number of important personal, financial and legal matters. When the owner of a company or organization divorces, their business interests might be impacted by the divorce. The individual will not lose their business or face, but may be subject to a forensic evaluation, which may or may not ascribe an unrealistic value to a nontangible and sometimes non-transferable asset. If not careful, said individual might lose a significant percentage of the marital estate.
Fass & Greenberg, Garden City divorce attorneys, invite New York business owners who might be considering separation read this blog highlighting important considerations such individuals should offer during this time, specific safeguards they can employ that could potentially protect their interests and how a divorce lawyer Garden City may be able to help them reach this goal.
There are circumstances in which one’s business holdings could be divided in accordance with New York State divorce laws. New York mandates that a couple must work out some type of property division arrangement or have marital property split in accordance with a civil principle known as equitable distribution.
Marital assets are the entirety of the property the couple accumulated during their married life. If the business was started after the spouses wedded, both parties could be entitled to a certain percentage of the entity’s estimated value.
Moreover, someone who started and established a successful business prior to getting married is not necessarily in the clear. If the entity grew in value during the marriage’s duration, the non-owning spouse may be entitled to a percentage of those assets.
The discussion of how businesses are impacted by divorce can be complicated and somewhat confusing. Therefore, Long Island business owners are urged to consult with a family lawyer Garden City NY before making any pertinent decisions.
Safeguards Business Owners Can Employ
Fortunately, there are several actions business owners can take that might protect their company holdings from division during the divorce process, including:
Prenuptial or Postnuptial Agreements
Pre and postnuptial agreements are court-accepted documents dictating specific contingencies regarding how a couple’s financial or legal affairs will be handled once they wed or possibly certain mandates dictating the major duties each spouse will bear responsibility for during their married life. As their monikers might indicate, prenuptial contracts are arranged prior to a couple marrying and postnuptial arrangements are established following their wedding.
Garden city lawyers firmly suggest business owners adopt pre or postnuptial agreements containing provisions keeping the business and associated assets apart from marital property. If this mandate is placed in writing and agreed to by the proprietor’s future or current spouse, the latter would be prohibited from collecting any amount of the entity’s assets in the event of a divorce.
Avoid Mixing Family and Business
Many people have heard this hackneyed phrase on numerous occasions. However, said advice rings true regarding protecting one’s business from the hazards of divorce. One simple bit of wisdom legal experts impart to business proprietors is to not employ their spouse in the organization and to never use marital funds for any business-related purposes. Such actions might be harsh but could save the owner a great deal of time, money, frustration and pain over the long haul.
Form A Trust or Corporation
Placing the business in question into a trust or incorporating said entity establishes it as a separate asset. However, owners must be careful not to invest any marital property into said trust or corporation.
Pay Spouse Off
Unless the business can be physically divided (if, for example, there are two stores and each spouse is awarded one), the non-titled spouse is given an “equitable share”, which means a “pay-out”. Unlike other marital assets, such as a bank account, or a pension, such awards are almost never calculated on a 50/50 basis. Unless the non-titled spouse made direct contributions to the business, their share is generally limited to 12-20% of the appraised value.
Divorce law Garden City NY pertaining to dividing business assets cover significant ground and may be difficult to comprehend. Therefore, Long Island business owners contemplating this life-changing event are encouraged to contact Fass & Greenberg. We can help a client identify all pertinent issues, understand the law, establish their assets and might be able to help them maintain the businesses they worked hard to create and expand. For more information about us, please visit https://fglaw.net/.