Protecting Business Interests During Divorce
When a business owner faces divorce, one of the most critical issues is what will happen to the business. That is when you need someone in your corner who has extensive experience in family law, commercial litigation and business law.
At The Weir Law Firm, LLC, attorney Bonnie Weir has all three. From her office in Bridgewater, she uses her skills to assist clients with the issues involved in dividing a business interest as part of equitable distribution. With over 30 years of experience in a wide range of legal fields, including family law, she knows how to protect either side’s interests during the process, starting with an understanding of New Jersey marital property law and a proper valuation of the business.
Is The Business Marital Property?
In New Jersey, the court will only divide marital property in a divorce. Martial property consists of anything the couple acquires either individually or together during the marriage. A possible exception to this rule is an inheritance or a gift from someone other than the spouse. Separate assets are not divided in the divorce and include assets purchased prior to marriage or after filing for divorce. They can also include assets excluded through a prenuptial agreement. If you or your spouse started the business during the marriage, it may be divided as marital property.
New Jersey is also an equitable distribution state, which means that the court divides marital property in a manner that is fair and equitable. This gives the court some discretion to determine what is fair and equitable in any given case. Often, that does not mean an even split.
What Is The Value Of The Business?
Determining the correct value of a business is both important and complicated. A professional business valuator or forensic accountant who can assess your business is crucial. There are often several methods to choose from in determining value. If you and your spouse cannot agree on a method, the court may end up choosing one for you.
After your business is valued, Bonnie can review options with you to determine creative solutions if you wish to retain the business and use other assets to offset a distribution interest. Whether you own the business or you are seeking an interest in your spouse’s business, Bonnie understands your rights and will make sure that a proper valuation will maximize your benefit.
Frequently Asked Questions About Dividing A Business In A New Jersey Divorce
The following are answers to some of the questions individuals in Bridgewater and throughout New Jersey often have about dividing a business during divorce.
What happens if I started my business before we got married?
A pre-marriage business is generally considered separate property. However, that may not exclude it from division. If the business increased in value during the marriage, that growth may be considered marital property. Contributions from a spouse can also affect how the court evaluates the business interest. Proper documentation of the business’s value at the time of marriage can be critical in these situations.
How is the value of a business actually determined during a divorce?
Business valuation is a detailed process that often involves financial analysis by a professional valuator or forensic accountant. Methods may include income-based approaches, asset-based calculations or market comparisons. The goal is to determine a fair and accurate value that reflects the business’s current and projected financial position, which the court can rely on when dividing business assets.
Can I keep 100% of my business after the divorce is finalized?
In many cases, it is possible to retain full ownership of the business. This may require offsetting your spouse’s interest with other marital assets such as real estate, retirement accounts or financial compensation. The ability to do so depends on the overall asset structure and what the court considers fair under equitable distribution principles.
My spouse owns the business, but I contributed to its success. Am I entitled to a portion?
Yes, contributions to a business during the marriage may create a claim to its value. Contributions can include direct involvement in operations, financial investment or indirect support such as managing the household. Courts consider both financial and nonfinancial contributions when determining whether a spouse is entitled to a share of the business.
Will the court force us to sell our business?
Courts generally prefer solutions that preserve the business rather than forcing a sale. However, if neither party can buy out the other’s interest or reach an agreement, a sale may become necessary. It depends on the parties’ financial circumstances and whether a practical alternative to selling the business exists. Courts also explore whether continued co‑ownership is realistic, whether the business can support a structured payout and whether a sale would significantly harm the company’s long‑term viability.
Secure Your Financial Future
Much is at stake during your divorce and how you divide your business could play a large role in your financial future. Take the first step to protecting that future by contacting The Weir Law Firm, LLC, to schedule an appointment with a business valuation attorney. You can call 908-333-4002 or fill out the online form.
Existing clients please call 908-575-0185.