Divorce for Business Owners

Divorce for Business Owners

When one or both spouses own an interest in a business, divorce becomes even more financially and emotionally complex. You want to preserve the value of the business you have worked so hard to build while ensuring that it can continue to provide sufficient income to support your lifestyle and that of your children.

Questions Impacting How a Business Will Be Divided

One of the first matters to consider is whether a prenuptial agreement or postnuptial agreement exists and what it says about how the business will be addressed if there is a divorce. That agreement will determine most of the decisions that need to be made.

If there is not a prenuptial or postnuptial agreement in place, you will need to consider these questions:

1. Is the business considered marital property under New York law?
2. How much time and money has each spouse contributed to the business before or during the marriage?
3. What method you will use to determine the value of a spouse’s interest in the business?
4. Are there buy-sell agreements with other partners in the business?
5. Were personal assets invested in the business?
6. Has the business been used to pay personal expenses?
7. Do agreements need to be put in place to preserve the status quo of the business?
8. What steps are necessary to maintain cash flow or increase liquidity?
9. How can one spouse buy out the other’s interests?

For businesses of any significant value, a business valuation expert will be needed to determine the value. In a mediation or collaborative divorce case, a forensic accountant will approach their job from a neutral standpoint. Using a neutral professional for this role and keeping your divorce out of court will allow you to utilize creative problem-solving techniques and ensure that the business can continue to grow and provide for the family in the future.

Spousal Support and Child Support

A business has value and it’s clearly an asset, but it is also a source of income for the owner. Income usually flows to the owner through a combination of W-2 wages, distributions, and personal expenses that are paid through the business (such as for expenses related to cars, cell phones, meals, and even domestic help). Perhaps the non-titled spouse was an employee and received wages as well. All these income sources need to be factored in to determine what spousal support and child support are needed and how that support will be paid.

In addition to ensuring that support obligations leave the business owner with sufficient income and assets so the business can continue operating smoothly, the collaborative divorce or mediation team will also ensure that the business owner can maintain his or her necessary standard of living.

New York Divorce Attorneys Who Understand How to Handle Business Interests

It is vital to work with a team prepared to anticipate and handle the issues that will arise when navigating a divorce in which one or both spouses own interest in a business. At Vacca Family Law Group, we have experience dealing with intricate financial matters and property division in high-net-worth divorce cases involving business ownership, and we know when to call in the appropriate financial expert(s) to help with valuation and other specialized concerns. We understand the complicated emotional issues you face when a divorce involves a business that encompasses your hopes, dreams, and years of sweat equity, as well as your considerable financial investment. It is for these reasons that we strive to protect interests on all levels when a divorce involves a business.

Contact Vacca Family Law Group

We can help prepare you for the challenges of divorce and guide you through the process. Through our non-adversarial divorce options, we are committed to protecting your interests without generating unnecessary conflict that can impede business functions. To learn more about how we can assist with the dynamics of your divorce involving business interests, contact us today to schedule your free introductory call.