The answer will depend on the facts of your case, including how long you were married, what the business is worth, and the level of participation of your spouse, if any, in the business. A business, unlike a pre-marital account in one’s name, changes in value based on the efforts of the owner. Therefore, it is not always exempt from distribution in your divorce.
“Proof that an asset is immune from equitable distribution raises a rebuttable presumption that any subsequent increase in value will also be immune. The burden then shifts to the non-owner spouse to demonstrate that 1) there has been an increase in the value of the asset during the term of the marriage; 2) the asset was one which had the capacity to increase in value as a result of the parties’ effort (an active immune asset); and 3) the increase in value can be linked in some fashion to the efforts of the non-owner spouse. If this is shown, the presumption has been successfully rebutted and the matter is to be resolved by the trier of fact. N.J.R.E. 301.” See Sculler v. Sculler, 348 N.J. Super 374 (Monmouth Ch. Div. 2001).
It should be noted that New Jersey courts have held that efforts of the non-owner spouse need not have been directly related to the business, and may include child-rearing and maintaining a marital home, so the other spouse can increase the value of a business. Therefore, while a business may be pre-marital, it is not necessarily exempt from equitable distribution.
At our firm, we routinely work proactively with forensic accountants to value a client’s business. In doing so, we ensure the client the best result based on the particular facts of the case.
