Divorce is always a sensitive subject — even during the most amicable of splits, you might find yourself in a long, hard fight to secure what is rightfully yours. This is especially true for separated couples in which one of the partners owns a small business.
Small businesses are built by the blood, sweat and tears of the owner–we’re a small business so we understand–so valuing and distributing that asset can be extremely stressful. That’s why it’s important for married small business owners to be as informed as possible regarding their options in case of a divorce.
Increased Divorce Rates for Small Business Owners
Being prepared for divorce is even more important for the small business owner than it is for others, as the small business owner is at an increased risk to experience divorce. According to marriage.com, the divorce rate for entrepreneurs is about five to ten percent higher than average.
This means that in the United States, where the divorce rate is around 38%, entrepreneurs experience divorce at rates between 43% to 48%. The stress of operating a small business and the increased likelihood of divorce give small business owners extra incentive to be prepared.
Why Divorce Is More Complicated for the Small Business Owner
A business started during the marriage, even one independently owned by one spouse, is considered by the court to be a marital asset, just like retirement accounts, properties, pensions, benefits, international assets, and partnerships. A business started before the marriage but operated during the marriage will also be subject to claims to the appreciation in value of the business.
Although most assets are divided equally, business interests are usually not. They are often distributed with the owner keeping their interest in the business and the non-titled spouse receiving a distribution based on an appropriate and fair percentage of the business which is usually less than 50%, often in the range of 10%-30% depending on numerous relevant factors.
Preparing for Divorce as a Business Owner
There are particular concerns for business owners before proceeding with a divorce. Questions about your books and records, your income, your bank and credit card statements and tax returns will often become a significant part of a divorce. If you are facing a breakdown in your relationship or considering filing for divorce, it may be helpful to consult with an experienced divorce attorney before the legal process unfolds.
If you are married to a business owner, it is even more important to consult with a knowledgeable attorney to better understand what you need to do to prepare for a potential divorce, from what financial documents to gather to how support may be affected by your spouse’s business income.
An Experienced, Knowledgeable Divorce Attorney can help Protect your Rights
We have worked with numerous business owners and their spouses. Working closely with and studying the ways accountants value these businesses, we will be able to advocate for your position to ensure that the valuation fairly reflects all of the relevant circumstances and particular issues in any given matter. With a solid understanding of the process and strong relationships with the accountants frequently appointed or selected to handle such valuations, we bring a level of experience and practical advocacy to the process to protect our clients. We can demystify some of the more complex and hard to grasp areas of valuing businesses for our clients and eventually, if necessary, the court.
For More Information, Turn to the Trusted Team at Aiello & DiFalco LLP
If you are a business owner or the spouse of a business owner considering divorce in New York, get in touch with Aiello & DiFalco LLP. Their dedicated team of lawyers has the experience and empathy to guide you through this stressful time.