Long Island Attorneys Protect Your Business from Your Divorce
Decisive steps to secure your right to ownership and control
At Bryan L. Salamone & Associates, P.C., we represent many entrepreneurs who put their life blood into their business, only to find when they divorce that their spouse has ownership rights which threaten their continued operation. Often, they do not have enough assets to off-set a court award of the business to them exclusively. That means they have to continue running the business with their ex looking over their shoulders, find an equity partner to buy the ex out, or sell out themselves. For these clients, our attorneys take an aggressive approach to litigation, looking for evidence in your business documents or customary practices that argue against co-ownership. We can often negotiate favorable terms that allow our clients to maintain control of operations, while providing a reasonable income to the ex-spouse for a reasonable time. When you choose Long Island’s largest and busiest divorce law firm, you get vigorous representation that protects your financial and emotional investment.
Preplanning to divorce-proof your business
Although most of our clients come to us when divorce is imminent, we also counsel clients on protective measure they can take before a divorce. If you have a business you started, or one that’s been in your family, you can take decisive steps to maintain ownership and control in the event that marital asset division becomes necessary. Key steps include:
- Prenuptial and postnuptial agreements — A marital agreement can designate a business as separate property so that it is not tossed into the marital pool and divided according to the laws of equitable distribution. For a marital agreement to be valid, it must be voluntary without any hint of coercion, and not so one-sided that the court will throw it out as unconscionable. To avoid these pitfalls, both spouses should disclose their finances and negotiate the agreement (each with their own attorneys) well in advance of signing.
- Operating agreements that lock out your spouse — Incorporation offers many protections, including a clear statement about who has the rights of ownership and control. It is important not only to yourself, but to your shareholders and partners, that you take steps to protect the business from the possible divorce of any key stakeholders. The entity (LLC, LLP, etc.) can require unmarried participants to obtain a prenuptial agreement along with a waiver of the intended spouse’s claim to future interest. Partnership and shareholder agreements can also prohibit the transfer of interest to a spouse during a divorce, so that the owners maintain control of the entity.
- Draw a competitive salary — Many entrepreneurs pay themselves a minimal salary and reinvest profits to grow the company. This sets a spouse up to make an equitable claim for ownership for having been deprived the tangible benefit of a share in the overall income. Ironically, greater benefits to your spouse from the business during marriage reduce his or her claim in equity after the marriage.
- Limit your spouse’s involvement — Your spouse’s claim to a portion of the business relies on the business being perceived as a marital asset. Unless you held the business as an asset before marriage, or was declared separate in a marital agreement, there is little you can do to insulate the business completely. However, if you allow your spouse to invest money in the business, participate in operations or make decisions for the company, you may be making your spouse a de facto partner.
- Buy out your spouse — Finally, you can concede that your spouse has an ownership interest in the business and formally purchase that interest. You must make sure to memorialize the transaction with a contract that states precisely what ownership rights exist and what your spouse is surrendering by signing and accepting compensation.
When business owners come to us for divorce, we immediately investigate the circumstances surrounding their business for any evidence that they’ve done any or all of the above, even unwittingly. Often, customs and practices have as much weight as written agreements. If you’ve been the driving force behind your business with minimal assistance from a spouse, we believe you should be able to retain ownership and control, and we fight to deliver that result.
Trust Long Island’s largest divorce law firm to safeguard your business
You’ve put blood, sweat and tears into your business; we’ll fight to help you keep it. An experienced attorney from Bryan L. Salamone & Associates, P.C. can provide the aggressive representation you need to maintain ownership and control of your business. Call us immediately at 1.631.479.3839 or contact us online to schedule a free initial consultation.