After decades of marriage, the prospect of a divorce can impact every area of life, including one’s business or professional practice. If a divorcing spouse owns a company related to construction, finance, technology or other business, or runs a medical or legal practice, it is reasonable to have concerns about the fate of the business at the end of the divorce process. Ideally, a business owner or entrepreneur will take steps to protect the business early on, such as signing a prenuptial or postnuptial agreement or placing the business in a trust.
However, it is often too late to take these precautions if divorce is imminent. In this case, the business owner will have to make some unpleasant choices. New York’s complex equitable distribution laws mean that an unprotected business is likely on the table for asset distribution.
Difficult decisions
Not many people enter marriage with the thought that the relationship will not last. However, the sad fact is that a high percentage of marriages end in divorce, and more often, these are marriages of 25 years or more. A spouse who owns a business may have limited choices when the business qualifies as marital property, including:
- Selling a portion of the business to pay the spouse his or her share of the asset
- Arranging to pay the spouse’s portion in installments over time.
- Offering the spouse other marital assets in exchange for his or her portion of the business.
- Selling the business and dividing the profits with the spouse.
Selling the business is probably the least attractive of the options, but it may require some skillful negotiations to save the business from asset division. An experienced attorney can assist with those negotiations. Additionally, the right legal professional can provide guidance for protecting one’s future ventures.