Your spouse either had a business prior to marriage or started one during the marriage, but now you are getting divorced, and you are worried that you will not be entitled to a portion of the value of the business. In New York, the law is clear that businesses established during the marriage and prior to the commencement of a matrimonial action or execution of a separation agreement 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 becomes as to how the Court will value the business? Hopefully, you can agree upon a value amount. However, in the majority of cases, this is extremely rare. If you and your spouse cannot agree then you must retain a professional for an evaluation. This cost 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 depend on your contribution to the business, the length of your marriage and the length that the business has been operating.
There are many methods of valuating a business which you and your spouse have built while you were married. As this is a key component in equitable distribution you should start the valuation process as soon as possible so you can get a fair value regarding the worth of the business.