Bergen County Business Owner Divorce Attorneys
When two individuals decide to get divorced, the person who ends up with ownership over a privately-owned business depends on many factors. Unfortunately, the division of assets, especially in high net worth divorce cases, can quickly turn contentious, especially when it comes time to distribute a business both spouses worked so hard to build.
With over 60 years of combined experience, our team of attorneys will work hard to help you preserve your business interests. Contact us online today.
How Business Assets Are Divided in a Divorce
New Jersey is an equitable distribution state meaning the division of marital assets are handled in a manner that is fair but not necessarily equal, which means the court will consider all marital assets, including any businesses, when dividing them. Unless a marital agreement was established before the marriage suggesting otherwise.
Business assets can be divided during a divorce in two different ways. You can either agree on how you would like your business interests to be divided with your spouse, which avoids litigation. If you cannot reach an agreement and a marital agreement is not in place, you will need rely on the court to decide for you. The court may allow both spouses to continue to work together and own the business collaboratively, if appropriate. One spouse may also acquire the other’s holdings in the business in exchange for cash.
Three Methods for Distributing a Business Interest
This is one of the most common method used to divide a business interest. Essentially, one spouse will buy out the other spouse’s share of the businesses. The buying spouse will transfer the amount owed the selling spouse or payments will be scheduled over time.
Another option is to continue to own the business jointly. This works best if the couple can divorce amicably and can function as co-owners. Another version of co-ownership could exist where one spouse runs the business while the other agrees to accept payments from business proceeds which would satisfy his/her share of the marital assets.
Sell the business
In the event one spouse refuses to purchase or accept the other’s share of the business and co-ownership is impossible, the next method would be to sell the business itself and divide the proceeds. This would not be the best option for a couple that disagrees over the value of the business or who they would like to sell the business to. Another issue with selling the business is that due to market fluctuations, the value of the business could be difficult to determine.
It would be beneficial to consult with an experienced attorney before selecting a method to distribute your business as there are various benefits and potential negative effects to each.
An expert valuator will assess the value of the couple’s stake in the company. Factors the financial professional may consider include but are not limited to the following:
- If business is closely held
- Which industry the business operates within
- Financial reports
- Cash flow
- Value of similar businesses in the same industry
Secure an Initial Consultation with an Experienced Attorney from Our Firm
With over 60 years of experience, Sherwood, Johnson & Poles is a law firm you can trust to navigate your divorce with professionalism, experience, and care. If you need assistance navigating your divorce as a business professional and have questions regarding equitable division, do not hesitate to reach out to our firm.