How Can a Divorce Impact My New Jersey Business?
Going through a divorce is very complicated. There are many matters that must be handled, including the division of assets. This process can prove to be difficult for any couple, even more so when one of the spouses owns their own business. As these are important matters to be handled, the assistance of an experienced New Jersey divorce attorney is beneficial to navigate the case.
Is a Business Considered Marital Property?
When a couple is going through divorce proceedings, their assets are divided between the two of them. In doing so, the property is separated into two categories: marital property and separate property. Marital property constitutes any assets that were acquired during the duration of the marriage. It is because of this that it tends to be subject to equitable distribution in the division process. On the other hand, separate property is assets that were acquired before the marriage or assets that were determined exempt in a written agreement between the spouses.
It is important to know that a business may be considered marital property in divorce proceedings. This means it may be equitably distributed between both spouses. While this is often misconstrued as an equal split, it is actually a fair and just division.
How is My Business Valued in a Divorce?
In divorce proceedings where a spouse is a business owner, the court usually retains the services of financial experts. This is to gain a thorough examination of their business records for the proceedings. There are some cases in which the court may even request an inquiry into the practice and expenses of the business in order to understand its financial state. It is crucial that this information is provided completely and accurately, otherwise, any inconsistencies can be reported to the IRS.
Can I Protect My Business?
There are many ways that an individual can protect their business from equitable distribution in a divorce. One way that this is possible can be by drafting a shareholder agreement. This document recounts the value of each party’s interest in the company in addition to limiting the transfer of ownership to another party. Another way this can be accomplished is with a prenuptial or postnuptial agreement. This outlines how any assets should be divided in the event of a divorce, allowing a person to keep their business safe from equitable distribution.
Contact our Firm
If you need an experienced legal team to guide you through your divorce, contact Townsend, Tomaio & Newmark L.L.C today.