As a business owner, you might worry about what could happen to your business in your divorce settlement. Although New York is not a community property state, there are instances in which your business could qualify as marital property.
Understanding the considerations for your business as part of your divorce will help you make the best decisions for your situation.
When did you acquire the business?
If you acquired or launched the business before you met your spouse, received the business as a direct personal inheritance or traded your own personal property for the business, you might retain full control in the divorce.
Do you have a prenuptial agreement?
For business owners who married after launching their business, a prenuptial agreement may protect their financial interest in the business. If you have a prenuptial agreement, the terms of your company’s settlement in the event of a divorce typically apply.
Did your spouse contribute to the business?
If your spouse contributed to the business in any way and helped it grow, the court may deem them entitled to a percentage of the business value. The specific percentage depends on the company’s value, the nature of that contribution and the significance of its effect. This applies even if the business is in your name alone, and even if you have a prenuptial agreement.
Even if your spouse receives a percentage of the company’s value, you can pay that value outright and buy out any potential interest in the business. This allows you to retain your company.