For a business owner, divorce can blur the line between personal and professional life. The company may be the owner’s livelihood, a major source of family income and an asset that grew during the marriage. Separating those interests can create difficult financial challenges.
How does New Jersey divide business assets?
New Jersey uses equitable distribution when dividing marital property in a divorce. This means the court seeks a fair division of marital assets. It does not always mean each spouse receives an equal share.
A business may become part of the marital property based on when it was started and how the spouses contributed to it. A company that one spouse owned before the marriage may still raise property issues if its value grew during the marriage.
The court may look at several factors when deciding how to treat a business, such as:
- When the business was created: A business started during the marriage may involve different considerations from one started before the marriage.
- Each spouse’s contributions: Money is not the only contribution that may matter. A spouse may have helped run the company, handled family duties or supported the business in other ways.
- The business’s value: The court may need to determine how much the business is worth and what part of that value relates to the marriage.
- Growth during the marriage: An increase in the company’s value during the marriage may affect the property division process.
- The best way to divide the interest: The spouses may need to consider whether one spouse will keep the business while the other receives other marital assets.
These matters can become harder when spouses disagree about the business’s value or each person’s role. Tax records, financial statements, ownership documents and other records may help show how the business developed during the marriage.
What happens to the business after divorce?
Dividing a business does not always mean selling it or closing it. In some cases, one spouse may keep the business while the other receives different assets. The spouses may also reach an agreement that allows the company to continue operating.
A clear understanding of the business and its value can help both spouses make informed decisions during divorce.
Get legal guidance for property division
When a business is part of a marriage, property division can involve many financial and legal questions. Understanding those issues early may help business owners plan for what comes next.
A New Jersey divorce attorney can review the circumstances, explain the available options and help address the business as part of the divorce. Anyone facing divorce should seek legal guidance for advice based on their specific situation.