Divorce For Professionals, Business Owners And Entrepreneurs
In New York, all marital property is subject to a fair and equitable division, but the total value each spouse receives may not be exactly equal. Valuation of closely held businesses – and partnership interests in a business or professional partnership – are indispensable issues in parsing marital property in a divorce. Invariably, a resolution through negotiation is the preferred approach. In the absence of agreement, each party will need to have its own separate forensic evaluations. Not only is the selection of a neutral for mediation purposes critical, the selection of the individual financial experts who are going to work alongside counsel is also critical to protecting your best interests in divorce.
I am David I. Grauer, Attorney at Law. For more than four decades, I have been providing my clients with critical analyses and trusted legal counsel for their strategic decisions before, during and after their divorces.
What Interest Does Each Spouse Have In The Business Or Professional Practice?
Addressing the threshold decision of interest the other spouse has in the business, if any, is paramount. Pivotal to the decision are factors such as:
- When the business was established
- The role of each spouse in the operation of the business
- How the business is structured
- The length of the couple’s marriage
- The relative contribution of the parties to the growth and management of the entity
If one spouse has no interest and no role in the business, they may not have a right to include the value of the business or professional practice in the marital estate; however that determination and the benefits on both side need to be carefully subjectively and objectively assessed.
What Are The Elements That Drive The Business?
Once interest is established, there is great importance in focusing on the elements that drive the business. Gathering raw data is the obvious first step before contending with the multiplicity of issues. Counsel provides significant guidance with regard to how the valuation is to be conducted, and the role – if any – of the other spouse is considered.
The valuator will need basic business or professional practice information, such as the nature of the business or professional practice. For example, is it a corporation, limited liability company, partnership, or solo practice for selling products or providing services? Other key data includes:
- Accounts receivable
- Officer, director or shareholder interests
- Pending legal action
This is not an exhaustive list. When necessary, I work with forensic accountants for asset investigations. Valuation is not just a function of permitting one spouse to surmise what they could get for the sale or dissolution of the business. The sale of the business may not be on the table. The key is to reach an equitable distribution of marital property.
Call A Trusted Attorney For Sophisticated Legal Advocacy
Divorce for business owners and professional practitioners is a highly complex field frequently clouded by emotional turmoil. Critical problem-solving and decisive strategies can save you from unfair outcomes or protracted litigation. Call my law firm, David I. Grauer, Attorney at Law, to speak with an attorney who has the knowledge you need and experience trusted by other attorneys. Call my office in White Plains at 914-269-2419 or send me an email to initiate a free initial phone consultation.