Small businesses help form the economic backbone of this country. Each year, millions of Americans start their own small business, and there are many more that have been in business for years, decades, or even longer. When you get married, you and your spouse are likely prepared to join forces and build your financial future together. In some cases, that will include a family business. If your relationship later falls apart and you are facing divorce, it is important to understand how your family business may be handled during the case.
New Jersey is what is called an “equitable distribution” state. During a divorce, a court will equitably divide marital property. It is important to note that equitable does not always mean equal. A court will look to a variety of factors contained in New Jersey statute to determine how best to divide a marital asset. If the business was started during the marriage, it is likely a marital asset and will need to be divided. However, dividing a business is notoriously difficult. Business assets include not just real property, vehicles, and buildings, but can also include inventory, fixtures, and accounts receivable. Moreover, the level of “good will” the community feels for the business can also increase or decrease a business’s value. In most cases, it will be best to hire a professional to provide an accurate value of the business.
In some cases, the business may be one that one spouse started before the marriage, or even one started by that spouse’s parents or grandparents. In such a situation, the business may very likely be separate property, meaning the other spouse will have no valid claim for a portion of its value upon divorce. Things can get more complicated, however, if the spouses used marital funds or property to invest in the family business, or even if the other spouse worked for or otherwise helped improve the family business during the marriage. There are situations during which a family business or a portion of its value may have changed from separate property to marital property. It is essential to have your attorney carefully examine the facts in your case to decide if that applies to you. One way to make sure this complication does not arise for you is to execute a pre-nuptial agreement specifically outlining how any interest in family business is to be handled upon divorce.
Contact us today and let us talk to you about your family case and your family business. We have extensive experience helping our clients understand their property rights in divorce.
Are you interested in seeking an annulment? If so, contact Williams Law Group, LLC right away. Our family law attorneys will review your case to determine if an annulment is an option. If it is, we will guide you through the process and ensure you make the best decisions for your future. Call our office at (908) 810-1083, email us at info@awilliamslawgroup.com, or contact us through our confidential online form to schedule a consultation. Download our Free Resource Guide today!