When couples get a divorce, they all must address the same issues, including distribution of marital property, alimony, child support, and child custody. In some cases, a business might complicate the divorce process. Whether the couple works together, one owns the business and the other works separately, or one takes care of the home, a business will most likely be taken into consideration when distributing assets. Unless otherwise agreed upon in writing, when a couple divorces, the business will usually be considered marital property. When marital assets distribution is contested, New Jersey will have to decide on the matter in the same equitable fashion as any other marital asset. Contact Paris P. Eliades Law Firm, LLC for a consultation today.
Is my business marital property or exempt property?
If the issue is contested, New Jersey courts will decide if the business falls under marital or exempt property. Exempt property is considered
- Assets acquired before the marriage and not agreed to be marital property
- Inherited assets not agreed to be marital property
- gifted assets not agreed to be marital property
- Any assets designated as exempt in a written agreement
If the court decides that a business is marital property, it will be equitably distributed, as the law states. In New Jersey, equitable does not always mean even, but what is fair and just to both parties. Sometimes, a couple has collaborated on a shared goal of having a successful business. This can include instances where one stays at home or even when one works at a separate career supporting the home financially while the business takes off. Other times, the business has done so well, one of the spouses didn’t need to work at all. If it is marital property, it will most likely become part of the case.
Valuation affects a New Jersey business
If a business falls under marital property and the case is contested, like any other marital property, the business must be assigned a monetary value. As a business owner, you may have a lot to consider in this situation. Financial experts will examine records and go through bookkeeping related to the business. The court may mandate an inquiry into the business practices and expenses. Other financial documents may be required in order for the court to have a clear picture about the value. These inquiries come with a risk to business owners who are sensitive to the circulation of confidential information and the possibility of financial discrepancies being reported to the Internal Revenue Service.
Protect your business
The business is at risk whether it is jointly owned or one spouse brings it into the marriage as shared property. The stress of financial inquiries coupled with the emotional turmoil of a divorce may be bad for business, leading to a degradation of profitability, productivity, and employee morale. There are ways to protect the business and the people involved. If the business is jointly owned, the couple may be able to draft a shareholder agreement. This allows for the couple to agree on the terms if the marriage does not work out. The agreement will detail the mechanism for valuing each party’s interest in the company, assign ownership in case of divorce, and limit the transfer of ownership to another party. Another option is to draft a prenuptial or postnuptial agreement that details what would happen to the business in case of divorce. Though couples do not want to face the idea of divorce at the beginning of a relationship, it protects everyone from unforeseen circumstances.
Contact a Sussex County law firm to protect your business
If you own a business or your spouse does, you have a lot to consider. If you are going to get a divorce and the business is considered marital property, you need quality representation to protect your rights and your business. At Paris P. Eliades Law Firm, LLC, we understand that you have worked hard to start and maintain a successful business or made a great effort supported a spouse doing so. Our dedicated attorneys are ready to assess your situation, guide you through your options, and help you decide the best course of action to protect your assets. Contact Paris P. Eliades Law Firm, LLC today for a consultation.