If you have significant investments or own multiple six-figure businesses, you might be wondering how these assets will be divided in a divorce. In New Jersey, when a couple gets divorced, the assets they acquired during marriage are subject to equitable distribution. While this seems straightforward, it can get complicated for spouse who has invested substantial funds and time into their business(es). Today, we go over what happens to a business during a divorce.
Dividing Assets: Is the Business a Marital Asset or Separate Asset?
You will first need to determine if your business is a separate asset, which means it was acquired before marriage, or a marital asset, which means it was acquired after marriage. All marital property in New Jersey is subject to equitable distribution, which includes businesses.
Therefore, if you are having issues determining if your business is a marital asset, you should speak with an experienced lawyer. You should also consult with an experienced lawyer if your spouse is attempting to keep their business during divorce negotiations. While you may be willing to allow this, a proper business valuation will help determine how much this business is worth. You would not want your spouse’s six-figure business to not be included in your divorce settlement.
What Property Is Subject to Equitable Distribution?
Under New York's divorce laws, marital property is divided. Separate property is not subject to equitable distribution. Examples of marital property include:
- Each spouse's income earned during the marriage
- Any property purchased with either spouse's income
- Any property the couple purchased while married (such as a house)
- Retirement benefits each spouse earned during the marriage
- Appreciation of marital property while the couple was married
How to Divide a Business During a Divorce
You should conduct a business valuation to figure out how much your business is worth and what it may potentially be worth in the future. Next, determine if your business is viable without both you and your spouse. If both you and your spouse share the business, you can divide it accordingly:
- Sell the business to a third party
- Consider continuing to work together in the business (this may prove difficult, but it is possible)
- Buy out your spouse’s share of the company
A business will count as an asset and New Jersey divides assets according to equitable distribution laws. Some of the factors the court may consider before determining asset and property division include the length of your marriage, each spouse’s age, each spouse’s health, and each spouse’s financial contributions to the marriage.
In a situation where only one spouse runs the business, the court may award the business to this spouse and give the other additional property to make up the difference.
Consult with an Experienced Divorce Attorney from Our Firm
Divorce can get more complicated when substantial assets and businesses are involved. As such, you should secure the legal services of an experienced divorce attorney that is committed to your success. At Lane & Lane LLC, we offer comprehensive divorce services for a variety of clients, including high net worth clients with successful businesses.
Consult with our firm online today or call us via (908) 259-6673 to schedule an appointment.