There are numerous recommended ways to protect your business from the possibility of divorce. In New York, any assets you acquire or earn while married are generally considered joint property. Therefore, a business you start during your marriage or the profits your business accrues after your wedding day may belong jointly to you and your spouse. This is especially true if you and your spouse are also partners in the business.
You may have signed a prenuptial agreement or created a partnership contract that addresses the contingency of divorce. However, if you did not, you and your spouse will have some difficult decisions to make if you are approaching the end of your marriage.
What are my options?
According to data, about 14 percent of small businesses in the U.S. are the ventures of married couples. While many of these couples may work side by side until it is time to pass their businesses on to their children, you may be facing the disappointment of having to figure out how to handle the business when it comes to property division in your divorce. Without a prenuptial agreement or similar contract, you and other divorcing couples who own a business have several choices to consider, including:
- Buying out your partner: Experts recommend obtaining a neutral appraisal of your business’ worth before offering a sum to purchase your spouse’s interest in the company. You may do this in a lump sum, in installments over time or by trading for other similarly valued assets.
- Selling it all: Selling your business to a third party is a long and challenging process, but you and your spouse may appreciate the clean break with the knowledge that your business will continue.
- Closing up shop: If you have a sentimental connection to your company, you may not want someone else to take it over. In this case, you and your spouse may agree to take the legal steps to dissolve the business.
- Keep on going: Not many advisors recommend trying to keep the company going as business partners after you and your spouse divorce. However, with appropriate contracts and agreements in place, you may be able to continue successfully sharing responsibility for the business.
If you are facing the question of what to do with your business, you may benefit from individual counsel about your options with an attorney who has experience assisting business owners going through divorce.