Litigation. Collaboration. Mediation.
  1. Home
  2.  → 
  3. Divorce
  4.  → The potential impact of business ownership on a New York divorce

The potential impact of business ownership on a New York divorce

On Behalf of | Mar 12, 2024 | Divorce |

Whether you are considering or already proceeding into the divorce process, you probably have many questions and concerns about how the end of your marriage could impact your financial future. One of the most complex areas in many of these proceedings involves the division of property. This especially holds true in instances where there is a healthy amount of marital assets, which sometimes includes a business owned by one of the divorcing spouses.  

The state of New York is an equitable distribution state in which all of your qualifying marital property is subject to division in a manner deemed fair by the court. Since fair doesn’t necessarily mean equal, this can create a large variance from case to case in comparison to community property states where the court splits marital assets evenly. Because of this, preparation and doing your due diligence before this critical step in the divorce process could strongly benefit your future best interests.  

Determining if a business is separate or marital property 

If you or your soon-to-be ex-spouse own a business, the key factor in whether or not it will be subject to division is if it qualifies as separate or marital property. Anything that was owned by either party before your marriage is typically considered separate property and not eligible for division. Contrarily, all items acquired during your marriage are most often included as part of the marital property. A court will evaluate certain criteria in making its ultimate determination regarding the business, including the following: 

  • Whether the establishment of the business took place before or during your marriage 
  • The amount of direct involvement of the non-business-owning spouse with its daily operations 
  • How much of a role handling certain family affairs by the spouse who doesn’t own the business freed up the other party to better handle all work-related affairs  

Determining an accurate valuation for your or your partner’s business can also play a crucial role in many aspects of your divorce beyond just the division of marital property. It can have a substantial impact on the amount of any future child support or spousal maintenance payments. This can seem like an overwhelming endeavor with multiple valuation methods and a significant amount of financial details involved, so a qualified business appraiser’s services could prove invaluable.    

The support and guidance from an experienced New York family law attorney can also allow you to more comfortably proceed through all aspects of your divorce, including the division of marital property. A savvy attorney can carefully analyze the unique intricacies of your case, answer all of your questions and concerns, and explore potential avenues to avoid litigation while also remaining fully prepared to fight for the best divorce settlement possible at trial if necessary.