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Business Valuation

Businesses & Property Division: What You Should Know

Divorce is never simple, but it can become even more complex if you own a business. The property division process, in which marital assets and liabilities get divided between the divorcees, can affect a business in unique ways.

If you're worried about how property division might affect your business, you're not alone. Today, we're covering everything you need to know about the role of businesses in property division.

Will My Business Get Divided During Property Division?

It largely depends on whether your spouse contributed value to your business.

If you have a prenuptial or postnuptial agreement stating that your business will remain your separate property even if your partner enhances its value, you probably don't have to worry about the court dividing your business (unless they rule the pre- or postnup invalid).

However, if you don't have a pre- or postnup, and your spouse can prove that they contributed to the business's value, the court may consider the business marital property since both spouses added equity to it. In that case, yes, your business might be on the table during property division.

However, that doesn't mean you'll need to sell your business. Often times this gets resolved by the business owner buying out their spouses interest in the business. In order to determine that value, it may be necessary to retain the services of a forensic accountant.

The Importance of Knowing the Value of Your Business

New Jersey is an equitable property division state. This means that in the event of a divorce, the court tries to divide assets and liabilities "equitably" between the parties. An equitable arrangement does not mean a 50/50 split. It just means that the court tries to ensure both parties have the same quality of life post-divorce that they enjoyed while married.

To that end, the value of your business can play an integral role in the property division process. Often times, other assets are utilized as an offset so that the business owner can buyout the spouses share of the business.

If you're considering divorce, you should start meeting with professionals such as forensic accountants and industry experts in your field to value your business accurately. These professionals can help you ensure that the court's final judgment is genuinely equitable and that your business isn't overvalued during property division.

At Lane & Lane, LLC, we help NJ residents navigate the property division process with confidence.

To learn more or schedule a consultation with our team, contact us online or via phone at (908) 259-6673.