Blog

Divorce in New York: What to Expect When There is a Family Business

 When a married couple in New York decides to end their relationship, they face emotional, financial, and legal hurdles. Among the legal matters to be decided are child custody, support, and the division of assets. Add a family business into this volatile mix, and the complexities can grow. Fortunately, New York has laws governing these situations and the family courts are experienced in dealing with them.

The New York Approach: Equitable Division of Assets

The division of business property in a divorce is a matter of state law. New York follows the majority rule among the states: the doctrine of “equitable distribution.”

Equitable distribution requires a division of property on the basis of “fairness,” typically without consideration of any alleged misconduct or fault. A “fair” distribution is not necessarily an “equal” division. A judge will order the most equitable fairest and most sustainable outcome for the parties.  Each spouse.

Generally, an initial issue is whether all of the business property is a part of the “marital estate,” or whether some is “separate” property under New York law. The general rule is that business property acquired during the marriage is considered a part of the marital estate. Exceptions include: business property acquired before the marriage, inherited during the marriage, received by gift, or designated as “separate” in a valid prenuptial or postnuptial agreement.

In New York, a business established during marriage is subject to equitable distribution. The amount of money or stake in the business is equal to what each partner contributed, either explicitly by working in the business or working to support it.

Courts consider many factors regarding the distribution of business property such as the contributions, direct or indirect, made by each spouse, the income generated by the business, and other factors.

A divorce of the couple does not always and necessarily mean that the business ends. The best way to protect the business in advance is to draft a legally valid prenuptial or postnuptial agreement, and in any event, to consult with counsel who will help you reach the best outcome for all concerned.

Contact me for more information on how to protect your business property during your divorce.  As an experienced Suffolk County divorce attorney who has handled divorces for over 22 years, I have the ability to help you determine the best course of action in your individual situation. Call 631-676-7100 to schedule a free consultation if you are seeking information about the division of business property in a New York divorce.

 

Comments are closed.