Protecting clients when a business is part of marital property
When a spouse or couple owns a business, it makes an already complex situation too much to handle when faced with divorce. Property distribution is an often contested matter that becomes harder when a business is established as marital property and distributed equitably by the state of New York. Whether one couple owns the business or both, they are most likely entitled to some portion of the appreciation, at the very least, unless agreed to in writing. A couple could face a highly contested court case on the issue with the potential to impact the business itself. If you are facing divorce and believe that the business is vulnerable, you need to consult with an attorney to understand your rights and what the future holds. If you need a law firm committed to clients and passionate about seeking justice, contact Penichet & Alberga LLP for a consultation.
Is your business marital property?
In order for a New York court to equitably distribute assets, they need to decipher between marital and separate property. Though the matter is more complicated, separate property is considered assets obtained prior to marriage, inherited assets, gifted assets, or any assets designated as separate in a written agreement.
If New York considers the property to fall under marital property, they will equitably distribute the property. Equitable distribution is not usually a 50/50 split. In most cases, it is what the court deems fair and just to both parties. When splitting an asset like a business, courts will have to assign value. This becomes a more complicated issue.
Valuation of a business
Before New York courts can equitably distribute assets, they will assign value. Valuation tends to burden owners with an inquiry into the finances of the business. Financial experts will examine the books and records of the business in question. In some cases, if the case is litigated, a court will order a government inquiry. When this occurs, the business is vulnerable to the circulation of confidential information and the possibility of financial discrepancies being reported to the Internal Revenue Service.
Protecting your business
If you jointly own your business or are a sole owner, there are ways to protect your business and contacting Penichet & Alberga LLP is a good first step. If you jointly own your business, you should consider drafting a shareholder agreement that leaves the courts out of the situation. This agreement can establish a mechanism that values each spouse’s interest in the company, assign ownership in case of divorce, and restrict transfer of ownership.
The other option is to draft and sign a prenuptial or postnuptial agreement that protects the business from the prying eyes of the court and establishes what will happen in case of divorce or infidelity, if you choose to include that. These options can save you a lot of headache when you are dealing with divorce and can help you focus on important factors.
Contact a Westchester County divorce attorney to protect your business
Business owners should always consider protecting their assets. Penichet & Alberga LLP understands what business owners are facing when dealing with divorce. Our firm has over 100 years of combined experience fighting for our clients. The legal team at Penichet & Alberga LLP celebrates an esteemed reputation across New York fueled by results. If you need our high-caliber legal services, contact us in White Plains by email or call 914-806-6675