Are you worried about losing your business following a divorce? If you are a business owner who has worked hard to build a respected operation, you should understand how family businesses and closely-held businesses are valued, considered and divided in a divorce.
Remember, in New York and New Jersey, all marital assets, including businesses, are subject to equitable distribution in accordance to state law. This means that the first determination to make is whether the company or business interest is marital property or separate property.
The next step, if the business is marital property, is to have it evaluated for the purposes of divorce. This may differ than typical market valuations; additional considerations for divorce may include discounts for lack of control, and lack of marketability, lack of transferability and more. In many divorces involving businesses, each side may have their own expert evaluator arrive at very different conclusions.
After you have evaluated a business for the purposes of Equitable Distribution, the attorneys for both sides will attempt to negotiate a settlement and propose division of the asset. If the parties cannot reach an amicable settlement, the valuation and division of the business may have to be tried before a judge who will make the ultimate decision.
A common problem, even after valuation and division has been finalized by settlement or trial, is to implement the split. Typically, one spouse will buy out the other’s interest in the company. This may present problems if the spouse does not have enough cash on hand to buy out the other’s interest. In such cases, there are a few options, including but not limited to taking out loans, bartering illiquid assets with your spouse or liquidating other assets awarded in the split for the buy-out.
An attorney who handles business assets in divorce can guide owners through this process and will know respected divorce forensic valuation experts. Together, you can determine the value of your business during a divorce and plan for any outside challenges that may be brought up during proceedings.
How Do I Protect My Business During a Divorce?
One way to plan against businesses becoming problematic assets in divorce is to have a prenuptial agreement or post-nuptial agreement in place. However, if you do not have an agreement to fall back upon, do not worry, as we can help you work out the division of the business and other property regarding the division of marital assets and possible alimony.
Divorces can be incredibly stressful, but we do everything we can to make the process easier for our clients. If you are contemplating a divorce and would like to protect your assets, let our firm arrange your initial consultation.
Our family law offices in New York or New Jersey can be reached through our online contact form or at (800) 711-5258.
KGG’s Corner: Concerned about the future of your business due to a pending divorce? Call us today at (800) 711-5258.
Kantrowitz, Goldhamer & Graifman, P.C. – Rockland County Divorce Attorneys