If you are a business owner, your business is likely one of your most valuable assets. As a result, you may be worried about losing part of your business in a divorce. This is a common concern, and luckily, you do have options when it comes to protecting your business. Read on to learn more about how a business will be divided and how you can protect your business in New Jersey.
Equitable distribution in New Jersey
The first thing to understand is the process of equitable distribution. Equitable distribution is the way your assets will be divided. It is important to know that your assets will be divided equitably, not equally. This means that your assets might not be split 50/50, but will instead be split in a way that is fair to each party. To determine this, the court will take the following into consideration:
- Your age
- Property value
- Yearly income
- The established financial standard of living in the marriage
- The terms of any existing child custody agreement
Another important thing to note is the difference between marital and separate property. Typically, marital property is subject to equitable distribution, whereas separate property is not. Marital property is any asset that you have acquired over the course of your marriage. Separate property is property that you obtained before the marriage, inheritances, gifts, etc. In many cases, a business will be considered marital property and will therefore be subject to equitable distribution.
How is a business valuated?
In order to determine how to distribute your assets, the court will first need to know their values. Typically, New Jersey courts will reach out to financial experts to help determine the true value of a business. The value of your business will be based on consideration of the following elements:
- Your businesses’ expenses
- Your businesses’ revenue
- Your businesses’ debts
You should be aware that attempting to hide any assets/forge any documents can lead to an IRS investigation.
What to know about prenuptial agreements
One of the best ways to protect your business is by creating a prenuptial agreement. A prenuptial agreement, also known as a prenup, is a legal document that declares how your and your partner’s assets will be divided in the event of a divorce or separation. With a prenuptial agreement, you can outline how your business will be divided in the event of divorce. A prenup must be created before you get married. However, if you did not create a prenuptial agreement, you’re still in luck. You can simply create a postnuptial agreement with the help of a family law attorney. This is the same document, only created after the wedding, rather than before.
Reach out to our firm with any questions or concerns about your New Jersey divorce.
Contact our Firm
If you need assistance with any family law issue, contact Greenberg & Walden, LLC today.