530 Oak St. Suite 102 | Syracuse, New York 13203
Determining a Spouse’s Share of a Business in a Divorce
Dividing marital assets can be one of the most difficult aspects of divorce, and when a family business is involved it gets even more complicated. If the business is a marital asset, then each spouse is entitled to a share, even if one spouse wasn’t an owner or operator. Because the vitality and net worth of the business can be affected, dividing this complex asset must be managed effectively for the sake of all involved.
New York’s equitable distribution statute says that an asset is marital property, and therefore subject to division, if it was acquired during the marriage or increased in value during the marriage. It does not matter that one spouse’s name is not on any of the documents. Nor does it matter if one spouse wasn’t involved in the business operation. They still may be entitled to a share. However, the statute allows a court to consider the impossibility or difficulty of evaluating an interest in a business, as well as the economic desirability of keeping that interest intact and free from any claim or interference.
As such, New York courts encourage property settlements that result in the least disruption of the business or decrease in its value. Assuming the spouses do not want to run the business together after divorce, then the ownership interests could be addressed in the following ways:
In any of these situations, there must be a careful and reliable valuation of the business. There are a few different ways to do this, and it usually requires retaining an independent business valuation expert. Each spouse has the right to hire their own expert to value the company. Business valuators look at multiple factors, such as:
As part of equitable distribution, the court will consider any contributions made by the non-owner spouse, both to the operation of the business and to the family household at large, to determine the value of his or her share.
If you are headed for divorce and have concerns about how your business will be affected, Bombardo Law Office, P.C. in Syracuse is ready to advise you. I have nearly 28 years of experience representing people in New York divorces. Please call 315-800-4002 or contact me online to arrange a consultation.
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530 Oak St. Suite 102
Syracuse, New York 13203
Bombardo Law Office, P.C. is located in Syracuse, NY and serves clients in and around Syracuse, Liverpool, Camillus, Warners, Nedrow, Cicero, Clay, Marcellus, East Syracuse, Elbridge and Jamesville.
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