In a New York divorce, martial assets are divided equitably, or fairly. For most assets acquired during the marriage, a fair distribution means an equal distribution. This is not always the case when dividing businesses.
When dividing a business in a separation or divorce, the first step is to determine how much of the business is marital, or was acquired during the marriage. Was it started during the marriage? Was it started before the marriage? How long before? What was the value at the date of the marriage and what is the value as of the separation or divorce? Once the increase in value of the business during the marriage is identified, that portion is divided between the parties equitably. For businesses an equitable distribution is not always equal.
The fairness of the division centers on the non-tilted spouse’s efforts. The titled spouse is the one who owns the business, so the greater the efforts of the non-titled spouse, the more they might get of the business. These efforts can be direct, like working in the business, or indirect, by taking on tasks like housekeeping, child rearing and other things that frees up the titled spouse to dedicate more time and effort into growing the business. A spouse who didn’t work in the business or directly contribute to its growth generally receives a smaller percentage of the business than the spouse who has worked in the business. Clearly, the question is quite specific to the circumstances of the couple, but the more the efforts of the non-titled spouse, the more the interest. Please reach out to discuss how the your circumstances might affect the distribution of a business in your case.