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.
Issues That Impact How the Business Will Be Divided in the Divorce
One of the first matters to consider is whether a prenuptial or postnuptial agreement exists and what it says about how the business will be addressed in the divorce. If you have don’t have such an agreement, you will need to consider issues such as:
- Whether the business is considered marital property under New York law
- How much time and money each spouse contributed to the business before or during the marriage
- The method used to determine the value of a spouse’s interest in the business
- Whether there are buy-sell agreements with other partners
- Whether personal assets were invested in the business or whether the business paid any personal expenses
- Whether agreements need to be put in place to preserve the status quo
- Whether steps are necessary to maintain cash flow or increase liquidity
- How one spouse will buy out the other’s interests
For businesses of any significant value, a forensic accountant will be needed to determine what that value is. In a mediation or collaborative divorce, the forensic accountant will approach her or his job from a neutral standpoint. Using a neutral professional for this role and keeping your divorce out of court will more likely 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 an income source for the owner. That 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 when we determine what the spousal support and child support needs look like and how they will be paid.
The collaborative team or mediation team will work to ensure that support obligations leave the business owner with sufficient income and assets to maintain the business going forward but also his or her necessary standard of living.
Work with 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. At Vacca Family Law Group, we have experience dealing with intricate financial matters in high-net-worth divorce cases, and we know when it is time to call in a financial expert 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 considerable financial investment. It’s for these reasons that we strive to protect interests on all levels when a divorce involves a business.
We can help prepare you for the challenges of divorce and guide you through the process. We protect your interests without generating unnecessary conflict that can lead to stalemate and stagnate business functions. To talk to us about the ways we can assist with the dynamics of your unique situation, contact us today to schedule a confidential consultation.
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