Whether you started your business after you got married, inherited it from your parents or purchased it, you likely have an interest in continuing to own and operate the business after your divorce. However, given that New York applies an equitable distribution standard in divorces, it is possible that your ex could have a claim to the business as well.
Instead of leaving your business in the hands of the court, you could try to file an uncontested divorce by negotiating directly with your spouse prior to filing or going through mediation. There are certain strategies that can help you protect your interest in the business you own during a divorce.
Put a price on the business, and make your ex an offer
Perhaps the most straightforward method to protect your business without splitting it up is to determine what it is worth and offer a fair portion of that to your ex in the divorce proceedings. If you own 51% of the company, for example, then offering your ex an amount out of your marital assets that represents roughly half of your equity in the business could be fair and reasonable if you use marital assets to purchase or develop the business.
If you owned the business prior to the marriage, a lower offer may be appropriate. If your spouse has contributed substantially to the business, either financially or through their own work, you may need to increase the offer to make it fair and reasonable. By pulling the funds out of your marital assets instead of out of the business, you protect your interest in the company.
Execute a prenuptial or postnuptial agreement protecting your business
Ideally, business owners would execute prenuptial agreements before marriage to protect their business. Sadly, that is always how life works. Few people want to consider the potential of failure when they initially get engaged.
If you didn’t execute a prenuptial agreement, creating a postnuptial agreement that protects your interest in the business and outlines what your spouse has a right to claim can be invaluable. It protects your ownership and removes any financial incentive for people who will file in the hope of securing a major windfall after their partner becomes successful.