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Divorce if You Own a Business in New Jersey | What to Know

If you own a business and you are getting divorced, you likely have a lot of questions. What will happen to your business? How will it be divided? Read on to learn more about the process.

Marital Property vs. Separate Property

When couples go to court to get a divorce, a judge is given the right to determine the state of their marital assets. This includes the division and distribution of assets and property amongst spouses. In order to determine which assets belong to whom, the judge must establish marital property from separate property:

  • Marital Property: Assets acquired and deemed both spouses’ property throughout the marriage
  • Separate Property: Assets acquired before the marriage and/or agreed to stay separate throughout the marriage

When a business is considered marital property, it can be subject to equitable distribution. This means the worth of the business can be divided in a fair and just way between both spouses. It is important to note that this does not necessarily mean a 50/50 split.

How is a Business Valued?

If a business is to be distributed between both spouses, it must be valued first. To begin this process, the business has to be defined. This allows the court to understand the status of the company, what assets are available to the spouse, and what shares are owned by other people. For example, privately-owned companies are often at least partially owned by family members or spouses. When determining the business’ value, a valuation expert analyzes business records in addition to business practices and expenses. During this time, the court may also request further information regarding the business owner’s financial state. A determining factor in valuing a business is how its income can impact other marital factors. This is because a spouse’s financial gain from the business can affect the division of other assets as well as alimony/child support payments. It is important to know that if a spouse did not contribute to the business’ growth, they may be entitled to a lesser percentage of its value.

How Can I Protect my Business?

There are ways a business can be protected in a marriage. This can be done by drafting a shareholder agreement, a prenuptial agreement, or a postnuptial agreement. A shareholder agreement designates ownership and each party’s interest in the business. A prenuptial or postnuptial agreement outlines how the value of the business would be divided if the couple were to divorce.

If you have any questions or concerns regarding divorce in New Jersey if you own a business, contact our firm today. Our team of experienced attorneys is here to walk you through the process each step of the way.


If you need an experienced legal team to guide you through your divorce, contact Townsend, Tomaio & Newmark L.L.C today.