Division of Business or Professional Assets

In a divorce or separation action, all "marital property" is equitably distributed after taking into consideration the various factors set forth in New York's domestic relations laws. But what exactly is marital property? New York State defines the term broadly, meaning that a variety of economic advantages — including business assets, professional practices and even higher education that increases a person's earning potential — can be taken into account if these assets were acquired during the marriage.

I am attorney Kurt Richards, and in the last 25 years of my career, I have represented more than 3,000 clients successfully in their divorce and family court matters, in both New York and New Jersey. I can help you sort through these complex issues to ensure that you obtain an equitable share of marital assets.

Dividing Business Interests Or Professional Practices

There are different methods in determining the value of a person's interest in a business entity. Forensic accountants and professional practice/business appraisers are usually needed to perform the evaluation and to testify as experts in their field.

The valuation of professional practices and business interests, including closely held corporations, is not an exact, 2+2 science. Therefore, it is often necessary to persuade and educate the court for the rationale in arriving at a particular value. I know several of these experts and will call upon their services if necessary to ensure business assets are properly accounted for in your agreement.

Dividing The Benefit Of Enhanced Earning Capacity

New York State defines "marital property" broadly. Included in New York's definition of marital property is the enhanced earning capacity available to a party as a result of advanced academic degrees, certifications or professional licenses acquired during the marriage.

So, if during the marriage one of the parties obtained a college degree or a post-graduate degree such as a J.D., M.D., MBA, Ph.D. or professional license, to the extent that the degree enhanced the earning capacity of that individual, the economic benefit (in present value terms) derived from the academic degree or professional license is treated as marital property at the time of divorce or legal separation.

The valuation of enhanced earning capacity depends on numerous factors and the methodology utilized for valuation. In any event, it is important that at the time of divorce/separation, all parties are aware of the breadth and scope of "marital property" in negotiating and attempting to achieve a fair and equitable resolution of all economic issues.

An Option For Those Who Have Not Been Married For Long

Ironically, and particularly in short-term marriages of new professionals, including doctors, lawyers and accountants, the enhanced earning capacity is often the most valuable asset available for equitable distribution. Essentially, enhanced earning capacity is the present value of the additional income a party will earn over his or her lifetime as the result of the degree, license or education obtained during the marriage.

If the value of the professional license has not been truly established through a long earnings history, it sometimes makes more sense to avoid the difficulties of valuing it as marital property, and deal with it instead in the context of spousal maintenance. That way, if the income stream suddenly changes in either direction, the maintenance award may be subject to modification after the divorce on the basis of a changed circumstance and upon proof of undue hardship. By contrast, property division arrangements (whether overvalued or undervalued) are permanent and cannot be changed once the divorce is finalized.

Get Experienced, Detail-Oriented Assistance

Defending or pursuing your equitable share of a professional practice, business interests or the enhanced earnings of a professional license requires an experienced matrimonial attorney to secure and protect your rights. I have more than 25 years of experience to draw upon when sorting through these complex issues. Contact my office in Staten Island at 718-720-1000 to get started.