Dividing Business Assets Fairly

Just like any other marital property, businesses established during marriage are subject to division upon divorce. However, unlike other assets ― such as cash or bank accounts ― it can be extremely difficult to split a business between spouses, particularly if the soon-to-be exes do not want to sell and are no longer able to work together running the business.

In a situation such as this, what is commonly done is that the actual business is awarded to one spouse, with the remaining spouse being given other property or assets to make up the difference. Consequently, how the business is ultimately valued can have significant implications. For instance, if the business is valued highly, the spouse awarded the business will likely have to sacrifice additional assets to the other spouse to offset the higher price.

If you are considering divorce and need the legal guidance of an experienced matrimonial attorney, contact Rieger & Fried LLP today. Serving throughout Nassau County and Suffolk County, our lawyers and legal professionals are fully committed to investigating the specifics of your business so that it is appropriately valued from the start.

The Crucial Task Of Valuing A Business

Typically, many complex determinations are made during a business valuation. Often, a forensic accountant is needed to review the company's records and tax returns to assess its earning capacity.

Common methods used for business valuations include:

  • Fair market value method
  • Capitalization of earnings method
  • Excess earnings method
  • Book value method
  • Liquidation method

Selecting the correct valuation method is imperative because it may have a strong impact on the value ultimately placed on the business ― and therefore an impact on how the business will be divided during divorce.

What If I Started A Business Before I Got Married?

If a business is acquired or created by only one spouse prior to marriage, it will generally be considered separate property and thus not subject to division upon divorce. However, it must be noted that any appreciation in value of that same business during the marriage will be treated as marital property, which is subject to equitable division.

When a business owner is about to walk down the aisle, he or she may attempt to avoid these potential issues altogether by executing a well-drafted prenuptial contract or agreement. This way, there is no question about which spouse will be awarded a business should the couple eventually get divorced.

Get In Touch With Rieger & Fried LLP Today

As with any divorce-related issue, dividing business assets can be incredibly complex. Contact Rieger & Fried LLP if you wish to speak to a dedicated and trustworthy divorce attorney. While our office is located in Garden City, we serve clients throughout Long Island, including those in Nassau and Suffolk counties. Reach out to us online or call us at 516-712-2268 for an initial consultation.