Divorce is never easy, but when there is a closely held business involved, the situation can be even more difficult. If you are going through a divorce, you may have questions about whether you will have to divide your business like the rest of your assets. The way a business is handled during a divorce can have a significant effect on the future of the business.
What is a Closely Held Business?
A closely held business is one that is family owned or one that has small shares owned by different investors.
What is Equitable Distribution?
In New Jersey, rules of equitable distribution apply to marital property. This does not necessarily mean that property is split equally, it is split fairly and is determined by the judge.
First, the court decides whether property shared among the divorcing couple is marital or separate. If the property is considered separate, meaning that it was obtained before the marriage, inherited, or was a gift, any increase in value of the business during the marriage will be treated as marital. After deciding whether property is marital or separate, a value is placed on the property and split between the two parties.
Is a Family Business a Marital Property?
In New Jersey, property, including a family business obtained by either spouse during the marriage, is considered a marital asset, meaning that it can be split between the two divorcing parties. However, there is no fixed way to divide marital assets.
How Does New Jersey Settle on a Fair Split?
New Jersey takes many factors into consideration before settling on a fair split. Some of these factors include how long the couple was married, as well as their age, health, and ability to take care of themselves after the divorce.
What is a Buyout?
Essentially, a buyout is when one spouse buys out the other spouse’s interest in the business.
Is Equitable Distribution my Only Option in New Jersey?
Another option for a divorcing couple who have a business is to co-own the business instead of going through equitable distribution. Co-owning the business allows for both parties to continue to jointly own the business they built together.
If co-owning is not an option, then the divorcing parties may want to look into selling the business. Selling the business is a guaranteed way that both parties will be compensated. However, it can also be very difficult to sell a business that you helped build and are probably very passionate about. It may also be difficult to sell the business if the business is not very profitable or is not well known.
Going through divorce is difficult, and it is even more difficult if both spouses own a business. For this reason, it is advisable to seek legal counsel immediately.
Moorestown Divorce Lawyers at Stockton Family Law Represent Clients Going Through a Divorce
If you are going through a divorce and there is a shared business involved, you need a lawyer who can help you come up with a settlement you can be satisfied with. Our experienced Moorestown divorce lawyers at Stockton Family Law will fight hard for your rights. For an initial, private consultation, complete our online form or call us at 856-412-5052. Located in Moorestown, New Jersey, we serve clients throughout South Jersey, including Mount Laurel, Burlington County, and Camden County.