Running a business is hard enough—add a divorce into the mix, and the pressure can feel overwhelming. For small business owners in Garden City and surrounding areas, a divorce isn’t just a personal matter—it can also threaten the company you’ve worked hard to build.
From ownership disputes to valuation disagreements, several legal and financial issues can impact your business during a divorce. Let’s explore the key considerations and how an experienced divorce attorney can help protect your business and future.
Is the Business Marital Property?
New York follows an equitable distribution system, which means that marital property is divided fairly—though not always equally—between spouses. If a small business was started during the marriage, it is generally considered marital property and subject to division. Even if the company was founded before the marriage, it may still be partially divisible if marital funds or the other spouse’s efforts contributed to its growth or maintenance.
Factors such as the timing of the business’s formation, the involvement of each spouse, and the utilization of marital resources can all impact whether and how the company will be divided. In some cases, a business that appears to be separate property on the surface can still become entangled in the divorce process.
Business Valuation in Divorce
Valuing a small business for divorce purposes can be a complex undertaking. Unlike real estate or bank accounts, a business often doesn’t have a clear-cut market value. Courts rely on experts such as forensic accountants or valuation professionals to assess the worth of a company, using one or more of the following approaches:
- Income-based approach, which focuses on future earning potential
- Asset-based approach, which evaluates the business’s physical and financial assets
- Market-based approach, which compares the business to similar ones recently sold
Additional challenges can arise when attempting to distinguish between personal goodwill (attributable to the owner) and business goodwill (attached to the company itself). Accurate valuation is crucial, particularly when one spouse wishes to retain the business and the other is entitled to compensation.
Protecting the Business: Buy-Sell Agreements, Prenups & Postnups
One of the best ways to safeguard a small business from divorce-related disputes is to plan. Business owners can take steps such as:
- Including divorce clauses in partnership or shareholder agreements
- Signing a prenuptial or postnuptial agreement that addresses business interests
- Keeping business finances separate from personal accounts and avoiding the use of marital funds for business purposes
These tools can provide clarity and protection in the event of a divorce, helping to avoid litigation and maintain business continuity. While not every divorce can be anticipated, laying a solid legal foundation can prevent the business from becoming a point of prolonged conflict.
Options for Division or Offset
If a business is deemed marital property, several outcomes are possible. In many cases, the spouse who runs the business will seek to retain complete control. To do so, they may:
- Buy out the other spouse’s interest based on an agreed-upon or court-ordered valuation
Offset the business value by awarding the other spouse a greater share of marital assets (like the home, retirement accounts, or savings) - Negotiate structured payments to the non-owner spouse over time
In rare instances, a court may order the business to be sold, particularly if neither party can afford a buyout or offset. However, this is typically avoided to preserve income streams and minimize financial disruption.
Impact on Business Operations
The stress of divorce can spill over into the day-to-day operation of a business. Owners may find it challenging to focus on management decisions while navigating court proceedings, especially if financial documents are being scrutinized or frozen. In contentious cases, a court may even impose temporary restrictions on selling business assets, incurring new debt, or making key decisions.
Employees, vendors, and clients may also feel the ripple effects. Proactive legal guidance can help minimize these disruptions and keep the business running smoothly throughout the divorce process.
How a Business Asset Division Attorney Can Help
For business owners in Garden City, working with a local attorney who understands both family law and business valuation issues is key. A Garden City-based divorce attorney can:
- Connect you with trusted local forensic accountants and valuation experts
- Ensure compliance with Nassau County court procedures
- Craft settlement strategies tailored to the regional business climate
- Represent your interests in mediation or litigation with familiarity and focus
At Aiello & DiFalco, we help small business owners in Garden City protect what they’ve built. Whether your case involves complex asset division or requires a business valuation expert, we provide the legal insight and support you need during this challenging time.
Frequently Asked Questions
Can I keep my business after a divorce in New York?
In many cases, yes, especially if you’re the one actively running the business. But if the company is considered marital property, you may need to compensate your spouse by buying out their share or offsetting it with other assets.
How is a business valued during a divorce?
A business is typically valued by a neutral expert using one of three approaches: the income-based, asset-based, or market-based approach. The goal is to determine its fair market value at the time of divorce, taking into account its earnings, assets, and liabilities.
What if my spouse helped with the business?
If your spouse worked at the business or supported it in non-financial ways, that involvement may increase their claim to a share of its value. Courts consider both direct and indirect contributions when deciding how to divide marital property.
Legal Help For Garden City Business Owners Facing Divorce
Divorce can put your small business at risk, but careful planning and experienced legal representation can help preserve both your livelihood and your peace of mind. If you’re a small business owner facing divorce in Garden City, contact Aiello & DiFalco to discuss your options and secure the future of your company.