When one spouse sets out to start a new business, it can often make sense to include the other spouse in the process. Businesses started by married couples can have many benefits, including possibly providing a steady source of income for both parties. So what happens when a couple in New York decides to divorce, but they own a business together? Deciding what happens to the business may be more difficult than some may anticipate.
First, determining if a jointly-owned business is a marital property usually is not the most difficult part, although, in some instances, there is potential room for debate about who actually owns the business. Once the business has been valued, the couple needs to decide what to do with the business. Should it keep running or should the doors close for good?
If one or even both parties want to see business operations continue, one party may buy out the other. It is particularly important to make sure that the valuation that was done on the business resulted in the most up-to-date and precise value possible. However, this will not necessarily prevent disagreements over a buy-out value, particularly if one spouse played more of a role in the day-to-day operations.
New York business owners do not necessarily have to worry about hitting roadblocks during a divorce. When laying out the foundation for a new business, a couple can also lay out the terms for what will happen to the operation should they decide to divorce. Sometimes referred to as a business prenup, this type of agreement can be especially helpful for avoiding potential future disputes over buyout values of the business.
Source: mainstreet.com, "Who Holds onto the Family Business When Couples Divorce?", S.Z. Berg, Feb. 10, 2015