Navigating a divorce can prove emotionally and financially challenging, and it only becomes harder when the divorce involves a business.
In New Jersey, unique laws govern the division of business assets during a divorce. Understanding these laws can help you journey through this complex terrain of divorce and business ownership more effectively.
How does a business factor into a divorce?
According to New Jersey law, if a couple established or acquired a business during their marriage, the business constitutes part of the marital assets in their divorce. New Jersey courts use the principle of equitable distribution, dividing assets, including businesses, fairly but not necessarily equally.
How do courts determine the value of a business in a divorce?
Assigning a value to a business during a divorce involves a comprehensive process. It typically requires the expertise of a business valuation specialist who determines the worth of the business. This professional bases their evaluation on various factors, including assets, income, market conditions and future growth prospects.
What happens to a business that pre-dates the marriage?
Divorces also scrutinize businesses established before the marriage. Typically, the courts consider any increase in the value of the business that occurred during the marriage as marital property. However, the initial value of the business before the marriage can remain as separate property.
What if both spouses participate in the business?
If you and your spouse both participate in the business, you will need to make some decisions regarding how you want to proceed with the business. You can consider options such as one spouse buying out the other’s interest, both spouses continuing to operate the business together or selling the business and dividing the profits.
Handling a divorce in New Jersey that involves a business can become a complex endeavor, but with this knowledge, you can approach the process with a clearer understanding of the potential implications for your business.