Going through a divorce is a challenging and emotionally draining experience. However, if you or your spouse are a business owner in New Jersey, the process becomes even more complex. Handling business assets during a divorce requires careful planning and strategic decision-making to minimize the potential impact of a divorce on entrepreneurial endeavors.
- Understand New Jersey's Equitable Distribution Laws: New Jersey follows the principle of equitable distribution, which means that marital assets are divided fairly but not necessarily equally. Owners and their spouses must review with their attorneys how this concept applies to their enterprise.
- Separate Personal and Business Finances: To protect a business, keep personal and business finances separate, maintain separate bank accounts and credit cards for personal and business use, and clearly document and demonstrate that any funds used for business purposes are from the business account.
- Obtain a Professional Business Valuation: The value of any business for equitable distribution in a divorce contains many complexities, some of which apply only in New Jersey. A professional business valuator, usually an accountant who is specially trained in this area, conducts a comprehensive assessment, considering factors such as revenue, assets, liabilities, market conditions, and future prospects. A detailed valuation report will give that expert’s opinion of the business, helping ensure a fair division of assets during the divorce. This valuation can also serve as a reference for potential negotiations or settlement discussions.
- Explore Buyout Options: In some cases, a divorcing spouse may be entitled to a portion of the business's value. To protect your business's continuity and avoid disruptions, you can negotiate a buyout agreement that allows the business owner to maintain sole ownership. This arrangement involves compensating the spouse with other marital assets of equal value or arranging a payment plan over time.
Divorce is a complex and sensitive process, particularly when it involves a business. Engage the services of the experienced divorce attorneys at Cohn Lifland to ensure that your business is accurately assessed, and a fair distribution of assets is determined.