AM I ENTITLED TO A PERCENTAGE OF MY SPOUSE’S BUSINESS?

If your spouse either had a business prior to marriage or started one during the marriage and now you are in the process of getting divorced, you are still entitled to a percentage of that business. In New York, the law is clear that businesses established during marriage and prior to the commencement of a matrimonial action is marital property, and subject to equitable distribution.  Additionally, even if the business was established before the marriage, the appreciation of value, where there have been contributions by the other spouse or the use of marital funds to increase its value, is marital property subject to equitable distribution.   

The question now is how the Court will value the business and what percentage will the non-owner spouse receive? There are many methods of valuating a business and hopefully, you can agree upon a value amount, but the reality is in many cases, this is extremely rare.  However, if you and your spouse cannot agree on the value of the business then you must retain a professional for the business evaluation. This cost for the forensic is expensive and even if you are not the “monied spouse” in most cases, you will be required to pay a percentage of this cost.  After the evaluation is determined your percentage will then depend on your contribution to the business, the length of your marriage and the length that the business has been operating. 

The valuation of a business is a key component in equitable distribution and if you cannot agree on a value then you should start the valuation process as soon as possible so you can get the fair value regarding the worth of the business and not have this hold up the pro of your divorce.