If you own a business, you may be worried about what will happen to your company in the event of a divorce. The answer generally lies in whether your business is considered separate or marital property. Separate property refers to property that was acquired before the marriage, gifts and inheritances, and any property legally kept separate. Marital property, on the other hand, is any property that was acquired during the course of the marriage. In New York, a couple’s assets will be divided through the process of equitable distribution. This means that their assets will be divided fairly, rather than equally. Generally, marital property will be subject to equitable distribution, whereas separate property will not. This means that if your business is considered marital property (as many businesses are) you run the risk of losing a portion of your business in your divorce. Read on to learn about the best ways to protect your business in New York.
What is the best way to protect my business?
There are three main ways to protect your business from divorce. The path you take will depend upon numerous factors, including whether you and your spouse both own the business, whether you are married yet, and more:
- Shareholder agreement
- If both spouses are joined in the business venture, there are ways to protect the business from divorce litigation. As business partners, you can execute a shareholder agreement that will value each party’s interest in the company, detail ownership if a divorce were to occur and restrict the transfer of ownership. This can be a powerful tool to protect the business from any kind of disruption to the marriage.
- Prenuptial agreement
- If you have not gotten married yet, you can create a prenuptial agreement. This is a document that declares how a couple’s assets should be divided in the event that their marriage comes to an end. This means that you can outline what should happen to your business in the event of a divorce and therefore avoid the valuation process and the process of equitable distribution.
- Postnuptial agreement
- If you are already married, you’re not out of luck. You can create a postnuptial agreement. This is the same as a prenuptial agreement, only it is created after the wedding, rather than before.
If you are concerned about protecting your business during a divorce in New York, our firm is here to help. Reach out today to discuss your options with a skilled and experienced divorce attorney.
CONTACT OUR FIRM
If you require strong and dedicated legal representation through a divorce or family law matter in Long Island, New York, contact Peter V. Mandi & Associates, Inc. today.