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Many couples today run a business together, however when the marriage breaks down, there can be major issues to sort out regarding the business. The couple not only has to divide their “normal” marital assets, they also must determine whether the business will continue, and, if so, how it will be run, or if it won’t continue, how it will be divided. The questions associated with dividing a business following a divorce in Short Hills can be a major source of conflict, not to mention ongoing litigation. The first thing that must occur is a business valuation. Under New Jersey law, there must be an equitable distribution of the “fair value” of the business.
It is important to understand that “fair value” may result in a totally different number than “fair market value.” Fair value contemplates the value of the business to each person, as well as their contributions to the business. As an example, assume a couple runs a construction business which belonged to one spouse prior to the marriage. The spouse who owned the business prior to the marriage does the bulk of the actual work, prepares bids, hires and fires employees, pays employees and has basically run the business for more than a decade. The other spouse recently quit another job to help run the construction business, and primarily sends out statements each month. The fact that the one spouse owned the business prior to the marriage will be reflected when determining fair value, however the fact that the one spouse does less work for the actual business may or may not be a factor.
In Short Hills, developing a business valuation in the divorce generally requires an expert forensic accountant, as well as a highly experienced asset division attorney who understands applicable legal standards and business accounting practices. Courts will generally consider the following when dividing a business during a divorce:
All of the considerations pertaining to the specific business, will be considered by the forensic accountant, as well as your attorney. Some of the potential outcomes of having a business during a divorce include:
Of course, there are many factors that will be considered during the division of a business when a couple divorces in Short Hills. If the divorce is shaping up to be particularly contentious—because one spouse engaged in business misconduct or attempted to diminish the value of the business, so the other spouse would get less—then this conduct may change the final division of the business. If you suspect your spouse and business partner is engaging in misconduct related to the business, you must tell your attorney immediately, as this is considered dissipation of marital assets. Under New Jersey law, the courts have the discretion to divide the business in a less than equitable manner if it can be shown the partner/spouse breached his or her duties to the business or engaged in misconduct related to the business.
Money matters, particularly those associated with the division of a business, can often be a highly contentious aspect of a couple’s divorce. Money matters are simply less open to compromise, since every dollar one spouse gets is one dollar less the other spouse will receive. Especially when a couple’s business provides a primary source of income for the family, a business valuation is critical to arriving at a final, equitable distribution of assets during a divorce in Short Hills. In Steneken v Steneken, the court found that few assets are as difficult to value as a business, largely due to the fact that “reasonable” people may have vastly differing views regarding how much the business is worth.
If you need help with business valuation following a Short Hills divorce, it is important that you work with attorneys experienced in the matrimonial field, such as the attorneys at the Williams Law Group. Our attorneys have a solid understanding of how to properly establish the value of a business in the context of a divorce. Our attorneys understand the intricacies of complex property division, and will use that knowledge to help you get the settlement you are entitled to. It is important that you not allow your spouse to dictate how the fair value of the business will be determined. Having an experienced attorney who will work hand in hand with a trusted forensic accountant and fight for your share of the business is crucial. The Williams Law Group will do this and more for your during your divorce.