Divorcing couples don’t have to go to court to resolve their disagreements, but they may have an easier time negotiating a settlement when both parties understand state laws.
In New Jersey, you can expect a judge to equitably divide your property in a divorce. They will learn a bit about you and your ex, as well as your marriage, before deciding what would be a fair and appropriate way to divide belongings and debts.
As a small business owner, the company you operate may be the most important asset that you own. In some divorces, couples have to divide the business. Numerous factors, particularly the three below, will influence what happens to your company in the divorce.
When and how did you acquire the business?
If you already had a successful business before you got married, that will limit your ex’s right to claim the company, as it might be your separate property. If you inherited the business, that could also lead to a claim that it is separate property not subject to equitable distribution rules. The timing of the acquisition and how you became owner will play a role in whether the courts view the business of marital property or not.
What contributions your ex made
Did you reinvest marital income into the company to keep it operational during a short-term economic downturn? Did your spouse help support the company and you when it was losing money rather than making it? Did your spouse perform unpaid work at the company as an administrative assistant or accountant?
The more contributions someone makes to the business, especially without compensation, the easier it may be for them to claim at least a partial interest in the company.
What is the company actually worth?
Is your business truly just a paper entity that allows you to practice as a licensed professional, or is it a physical location with tens of thousands of dollars worth of supplies and equipment? The kind of company you operate will influence what the business is technically worth.
Even when there are physical facilities and equipment, depreciation can affect the value of those belongings. Liabilities, like business debts, and also influence what the courts believe the business is actually worth.
Some people can protect their businesses as separate property, while others can show that without their labor, the business has no real financial value. Learning more about property division rules in New Jersey divorces can help those with assets that they want to protect.