If you are getting divorced in New Jersey, you may be worried about what will happen to your business. Read on to learn more about what happens to a business during a New Jersey divorce and the ways you can protect your business.
What is equitable distribution?
In New Jersey, a couple’s assets will typically be divided through the process of equitable distribution. This means that their assets will not necessarily be divided 50/50, but instead will be distributed in a way that is fair to each party. To determine this, a judge will consider various factors, including your and your spouse’s age and health, your and your spouse’s earning potential, whether one spouse furloughed their goals in support of another spouse pursuing theirs, whether one spouse paid for the other spouse’s education, your and your spouse’s yearly income, your child custody agreement- if any, and more.
What is the difference between marital and separate property?
When it comes to equitable distribution, your marital property will be subject to division and your separate property will not.
- Marital Property: Assets acquired and or converted into both spouses’ property throughout the marriage
- Separate Property: Assets acquired before and agreed to stay separate throughout the marriage
So, into which category does a business fall? In New Jersey, most businesses are considered marital property, unless stated otherwise in a legal document.
How will my business be valuated?
In order to distribute your business, the court will need to know its value. To determine this, the court will usually bring in financial experts. They may examine your business’ expenses, revenues, and debts. It is important to know that undervaluing your business, either on purpose or by accident, can result in serious legal consequences. In some cases, the IRS may get involved. As a result, it is important to work with an experienced attorney to ensure that all documents are submitted properly.
How can I protect my business from divorce?
It was stated above that your business will likely be subject to equitable distribution unless stated otherwise in a legal document. This legal document is a prenuptial agreement. A prenuptial agreement is a legal document that declares how your and your spouse’s assets should be divided in the event that your marriage comes to an end. This means that you can outline what should happen to your business in the event of divorce. If you did not create a prenuptial agreement before your wedding, you can still create a postnuptial agreement– this is the same document, simply created during the marriage, rather than before.
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