How is a Business Divided During Divorce?

How is a Business Divided During Divorce?According to the U.S. Small Business Administration, there are over 820,000 small businesses located in New Jersey. Small business owners work tirelessly to keep their companies afloat. But sadly, a divorce can threaten a small business’s survival. Here’s what you need to know about dividing a business during divorce:

Marital Assets vs. Separate Property

Marital assets are divided between both spouses during a divorce, but separate property is not. Therefore, the first task at hand is determining whether your business is classified as a marital asset or separate property. Even if the entire business is not classified as a marital asset, the money made through the business since the start of the marriage is considered a marital asset.

How A Small Business is Divided During Divorce

The first step in the process is calculating the value of the business, which is not as easy as it seems. A business valuation expert must analyze the business’s tangible and intangible property, assets, and liabilities. The expert will also analyze the business’s past performance and the current market to estimate how much the business will make in the future. After collecting this information, the expert will place a value on the business.

Next, the judge must decide how to fairly divide the couple’s assets. If the business is owned by one spouse, the judge may let him keep the business and award other valuable martial assets to the other spouse. This ensures the division of assets is still fair even though one spouse gets to keep the entire business.

If both spouses were involved in the business’s operations, the judge may award each spouse a percentage of the company. The spouses may negotiate a buyout, which means one spouse would compensate the other in exchange for his share of the company. This is common since many couples no longer want to work together after their divorce has been finalized. Even if you cannot afford a buyout at the time of the divorce, you can discuss the possibility of a payment plan with your spouse. If your spouse is open to this idea, you can take control of the business right away and gradually pay your spouse for his share.

If you are a small business owner who is divorcing their spouse, contact Williams Law Group, LLC right away. Let our experienced divorce attorneys fight to protect the business you worked so hard to build. Call our office at (908) 810-1083, email us at, or contact us through our confidential online form to schedule a consultation.

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