Divorce For Business Owners In New Jersey

The division of assets is one of the most contentious parts of a divorce. When it involves a business, the process can become more challenging. Unlike standard marital properties like the family home or cars, getting a fair evaluation – and division – of a business is not straightforward.

In cases like these, it’s crucial to work with a lawyer with business experience. With over 80 years of combined experience, the attorneys at Cipriano Law Offices, P.C., have the knowledge and resources you need to protect your business interests during a divorce.

Business Valuation In Divorce

Determining the fair market value of your business is crucial. It ensures that you receive a fair share of the business value, especially when both you and your ex-spouse have ownership interests.

Here are several methods to value a business during divorce:

Market approach: This method compares your business to similar ones that have recently sold. It uses market data and sales of comparable companies to estimate the value.
Income approach: This approach calculates the present value of future earnings or cash flows. It often uses methods like capitalization of earnings or discounted cash flow analysis, projecting future income, and discounting it back to present value.
Asset approach: This method evaluates the business’s assets minus its liabilities. It often applies to businesses whose value depends on tangible assets rather than income.

The method used for your case will depend on the nature of the business and the circumstances of your divorce. In complex or contentious cases, combining these methods is often necessary. Using the correct method is crucial for a fair and accurate assessment. Our attorneys will connect you with professionals and forensic accountants who can offer valuable insights for your case.

Protecting Your Business In A Divorce

New Jersey follows equitable distribution laws. This means that courts aim for a fair division of marital assets based on factors such as the length of the marriage and each party’s contributions.

If your business began during your marriage, then it counts as marital property and is subject to division. Even if you established it before the marriage, it may still undergo division if it used marital funds or if your ex-spouse contributed to its success. To protect your business interests, consider:

Keeping business and personal finances separate: Ensure that business finances are distinct from personal ones. Using separate bank accounts, credit cards and financial records can help show that the business isn’t a marital asset.
Negotiating settlements: Work on a settlement that lets you keep the business by offering other assets in exchange. This can include any real estate properties, such as the family home or part of your retirement funds. You can also offer to buy out your ex-spouse’s share of the business. Our attorneys can help create a balanced settlement, allowing you to retain control.
Using a buy-sell agreement: This agreement outlines how you will transfer or sell ownership interests in the business if specific circumstances occur. If you already have one, activate it to manage the ownership division. If not, consider drafting one with legal help to prepare for disputes.
Drafting a prenuptial/postnuptial agreement: Ideally, having a prenuptial or postnuptial agreement already in place is one of the best ways to protect your business. This agreement can outline how you will divide your marital assets in a divorce, ensuring clarity and protection. Our attorneys can help you draft these agreements to preserve your business interests effectively.

Using these strategies, business owners can protect their interests and ensure their business’s stability during divorce. Our experienced lawyers will explore all options to achieve a favorable outcome.

How Businesses Are Divided In Divorce

There are a number of ways to “split” or divide a business in a divorce. However, this will depend on the specific circumstances of the marriage and the business itself. Some common methods include:

Buyout: One party buys out the other’s interest in the business. They can do this by compensating the other with cash or assets equal to their business share.
Co-ownership: Both parties continue to own and operate the business together. While this may not be common due to potential conflicts, it works if both parties have a strong working relationship and clear agreements on roles and profit sharing.
Selling the business: You and your ex-spouse sell the business and split the proceeds. This option can be used in situations where neither spouse wants to continue running the business or a fair buyout is not feasible.
Structured settlement: One party pays the other over time. This option is useful when the buying spouse lacks immediate funds, allowing a gradual transfer of financial interest through structured payments.
Asset exchange: One spouse retains the business, while the other receives assets of equal value, such as properties, investments or retirement accounts. This method balances marital asset division without selling or co-owning the business.

The decision on how to divide a business usually starts with negotiations between the parties and their attorneys. Ideally, both parties agree on the division by considering the business’s value, financial impact and personal preferences.

If the parties can’t agree, the court may decide based on New Jersey’s equitable distribution laws. It’s important that you work with an experienced high-asset divorce attorney to protect your interests and ensure a fair outcome.

Why Choose Cipriano Law Offices, P.C.

Cipriano Law Offices, P.C., is uniquely suited to assist business owners and high-income professionals. Our team of high-asset divorce lawyers brings a wealth of experience in resolving complex disputes.

Our founding attorney, Melissa Cipriano, holds an MBA and is a qualified economic mediator. Together with Bart W. Lombardo and Karen Tichenor Willitts, they each have more than 20 years of experience litigating complex property division disputes involving business and professional association interests in divorce proceedings.

At Cipriano Law Offices, P.C., we focus on giving personalized attention and strong advocacy to address each client’s unique concerns. Our firm has also established connections with business valuation experts, which is crucial in providing evidence and resolving disputes. Whether it’s traditional court proceedings or alternative methods like mediation, our attorneys are ready to represent you and your best interests.

Reach Out To Our Business-Savvy Divorce Lawyers

To learn more about the services we can provide for you, call us at 973-852-3346 or email our office to schedule an initial consultation. Based in West Caldwell, we serve clients in Essex County, Bergen County, Morris County and throughout northern New Jersey.