Will I Lose Half My Business in a New Jersey Divorce?

 

Starting a successful business is an incredible challenge. Most business owners pour their heart and soul into their business, not to mention countless hours of work. So, what happens to your business when you get divorced?

This is a question that many business owners dread. The last thing these individuals want is to give up ownership of something they have worked so hard to create. It might seem unfair to have to hand over 50% of your company to your former spouse, especially if they did not play a role in its creation.

If you are going through a divorce and you want to protect your business, the first step is education. After you learn more about the laws that govern this situation, the solution becomes clear. An experienced attorney can also help you through this challenging period so that you can walk away with what is rightfully yours.

How Assets are Divided in New Jersey Divorces

When it comes to divorce, New Jersey adheres to something called equitable distribution laws. This means that when you and your spouse divide your assets, you will split everything so that each party receives half of the overall value. With some exceptions, this applies to real estate, savings, collectibles, and businesses.

How Businesses are Divided in New Jersey Divorces

Your business is considered an asset, and the equitable distribution laws apply to assets like this. With that being said, there are a few notable exceptions you need to be aware of:

• You only need to split your business if you created it while you were married
• You are usually not required to split your business if you inherited it
• If you owned the business before your marriage, your spouse is only entitled to half of the growth of the business since the marriage

The Valuation of Your Business

In order to determine how much value your spouse will receive from your business, the court will need to figure out how much your business is actually worth. This means that a business valuation expert will determine the business’ “fair value” according to New Jersey law.

Note that “fair value” is not the same as “fair market value.” When determining a business’ fair value, the valuation expert will not take into account things like the difficulty or length of time needed to sell the business or the fact that you have relatively little control over the business as a minority owner. At the end of the day, a valuation expert may determine that the “fair value” of your business is significantly different compared to the “fair market value.”

How to Stop Your Spouse from Taking Your Business in New Jersey

While it might not be possible to stop your spouse from taking any value from your business, a qualified legal expert can help you minimize the overall impact of a divorce on your business. Successful strategies include:

• Showing the court that your spouse did not contribute in any meaningful way to the business
• Arguing that the “fair value” of your business should be lower, which means your spouse receives less money
• Reducing alimony because your spouse is already receiving a significant amount from your business

The Importance of Legal Help

Gaining control of a business you have worked hard to create is important. Reach out to Giro, LLP, Attorneys at Law, and we will help you walk away from your divorce with your dignity intact.