Family Business and Divorce in New York
Divorce can be complicated enough, but adding a family business to the mix means that both parties likely have a lot of questions about the future of the business and the assets attached to it. Under New York law, professional practices and businesses influence the earning capacity of a person and therefore can be subject to property division laws when a couple divorces.
Divisible assets inside a New York family business can include medical practices, smaller limited liability companies, licenses to practice a profession, or “cash” businesses. The classification of marital property is an important exercise and the family business may be included in this after a review of stock options, corporate bylaws, tax returns, and financial statements. This might require working with an experienced attorney in addition to a financial expert who can explore these records for an accurate accounting.
If the parties to a divorce own and operate the business together, they may also opt to keep their business partnership but dissolve the marriage. Specific planning and guidance can help to establish strategies for this unique situation. Sometimes, that company may already have rules in place for post-divorce management if an agreement has been signed beforehand. Review this document with an attorney to be clear on your rights and responsibilities as a stakeholder in a family business during and after a divorce has been finalized.
If you are involved in a New York family business and are contemplating or beginning the stages of a divorce, you need advice on the possible arrangements for that company after the marriage has dissolved. For the purposes of property valuation, any marriage that also involves a family business may require an accounting of all possible business assets, some of which could be classified as marital property and dealing with the “big” question which may be, will the family business continue, even if the marriage ends?