Many people think of their home and work lives as being substantially separate. If you own a business, especially one in which your spouse has little to no involvement, it may seem logical that the business would be your own personal property. However, in many cases, New York law considers businesses to be marital property, meaning that a divorce could have major implications for the business’s ownership and continued operation.
Is My Business a Marital Asset?
New York law has a broad definition of marital property that includes almost all assets acquired by either spouse throughout the course of a marriage. Importantly, the law specifies that this is true “regardless of the form in which title is held,” meaning that if you acquired or started a business during your marriage, it could be considered marital property even if your spouse is not named as a partner or joint owner.
However, a business will be considered your own separate property if you owned it prior to your marriage, or if you acquired it during your marriage through a gift or inheritance, or in exchange for other separate property. A prenuptial or postnuptial agreement with your spouse could also specify that your business is to be treated as separate property. However, if a business increases in value during the marriage because of contributions from your spouse, at least part of the business could become marital property under New York law.
What Happens to the Business in a Divorce?
In a New York divorce, you will be able to keep all of your separate property, but your marital assets, including a business that qualifies as marital property, must be equitably divided. This could mean that you will have to sell the business in order to divide its value with your spouse, but in most cases there are other options. New York courts consider a variety of factors in determining an equitable distribution, including the liquidity of assets, the difficulty of accurately valuing a business, and the importance of keeping a business intact.
With these factors in mind, the most equitable option may be for one spouse to be granted full ownership of the business while the other is granted a larger share of other marital assets. If it is difficult to achieve an equitable property distribution at the time of the divorce, the court could also order a business owner to pay the other spouse a distributive award as a lump sum or in fixed installments after the divorce.
Contact a Rockland County Divorce Attorney
If you want to protect your business assets during your divorce, the Law Offices of Robert S. Lewis, P.C. can help. We have extensive experience in both family law and business law that we will put to use on your behalf. Contact our Hudson Valley area divorce lawyer for a free consultation by calling 845-358-7100 today.