What Happens to My Business In a Long Island Divorce
Separate vs. Joint Businesses in Divorce
First, the courts will determine whether the business is owned separately by one spouse or if it’s a joint business that can be considered marital property. If the business is separate property, such as if one spouse owned the business prior to the relationship and the other spouse married into it, the business will simply remain the property of that spouse.
However, if the business is considered joint property, the division process is a little more complex.
Jointly Owned Businesses in Divorce
If you and your soon-to-be ex spouse co-own the business together, the dissolution process is a little more complex. You have a few choices regarding how you’d like to proceed.
Selling the Business and Splitting the Profits
If you and your ex each own 50% of the business, you can liquidate the business and split the proceeds. This also works if one spouse owns a higher or lower percentage of the business; the company is still liquidated and each spouse receives their percentage of the profits.
For example, if one spouse owns 30% of the business and the other owns 70%, and the business sells for $100,000, the first spouse would receive $30,000 and the other $70,000, less taxes and legal fees.
Buying Out Your Partner’s Share During Divorce
You may also have the option to buy out your spouse’s share of the business and transfer sole ownership of the company to yourself.
Using the above example, if the spouse that owned 70% of the company wanted to buy out their partner’s share in the business, they would need to pay them 30% of the value of the business. Since the business isn’t being sold, the professionally appraised value of the business is the figure around which you will operate.
If the business is valued at more than it would sell for, you will still need to pay your spouse their percentage of the value. If you expect that the business will sell for much less than it is worth in the current business climate, retaining ownership and paying out the higher amount to buy your ex’s portion of the business may be your most lucrative option. It may be in your best interest to continue operating the business, particularly if it’s doing well and you expect to see growth.
Selling Your Share to Your Partner in Divorce
If your partner owns a greater percentage of the business or simply has more motivation and/or ability to run the business, you can also sell your share of the company to your partner. This may be in your best interests if you need the infusion of liquid assets to gain independence after your divorce, or if you simply no longer have the desire to operate the business.
Continuing to Operate the Business Together After Divorce
If neither you nor your ex-spouse want to sell the business or sell your shares in the business, you may decide to continue operating the business together as professionals, despite your divorce. This can be challenging to navigate, so it’s critical that you have adequate legal support before making a decision.
Are You a Divorcing Long Island Business Owner? Get the Legal Help You Need Today
At Hornberger & Verbitsky, P.C., we understand how complicated getting a Long Island divorce can be even when business ownership isn’t an issue. If you’re considering dissolving your marriage as a business owner, it’s critical to discuss your legal options with an experienced divorce attorney. If not, you stand to potentially lose your business entirely or lose some of its value.
Contact us today for more information about protecting your share of your business during a divorce or to schedule your free initial consultation. We can help you start planning how to dissolve your marriage with the least amount of negative impact possible on your business, you self and your children.
Call our office now at 631-923-1910 to book your appointment to speak with an experienced Long Island divorce lawyer. We are ready to help you.
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