What Happens to a Family Business in a Divorce?By Moskowitz Law Group, LLC |
Divorce can be complicated. Shared assets must be divided between spouses in the case of a divorce, and family businesses are no exception. If you are facing a divorce involving shared assets such as a business, it is critical to work with an experienced divorce lawyer who can advocate on your behalf in court. Contact us at Moskowitz Law Group to learn more about what happens to a family business in a divorce.
Businesses Founded During Marriage
In New Jersey, all assets and debts obtained during the matrimonial partnership will be distributed, i.e. divided, in the case of a divorce. These are considered to be marital assets. Under ordinary circumstances, the court can divide marital property in a divorce, but not separate property. Separate property refers to assets obtained before marriage or specifically gifted to or inherited by one party.
Generally, a business that is formed by s≠pouses during a marriage is considered to be marital property and is therefore subject to division by the court. However, every case is different, so it is best to consult with an attorney to better understand the nature of your assets and your options moving forward.
Businesses Founded Before Marriage
In most cases, assets obtained before marriage are categorized as separate property and are not subject to division by the court. However, separate property can become marital property when one spouse adds to it or increases its value. If one partner started a business before marriage, their spouse may have a genuine claim to it if they played a part in the company’s growth and success. An experienced family law attorney can help parties understand their rights to businesses started before marriage.
What Happens If the Company Is in Debt?
For asset division purposes, any business shared by spouses will need to be thoroughly appraised. A forensic accountant or other financial expert will look at the tax returns, profit and loss statements, and financial reports to determine the value of the business. The company will also be compared to similar businesses in the area to arrive at an accurate valuation. When your divorce involves a business with substantial value or other significant assets, it is always best to work with a divorce attorney. An attorney can make sure that you work with the right professionals to valuate your assets and advocate on your behalf for your fair share.
Learn More About Your Options Involving Family Businesses and Divorce
If you are divorcing a partner with whom you share a business, you have legal options. Depending on your relationship with the other party and the nature of your business, you could be able to continue as business partners, buy out the other person, or sell the business entirely.
A skilled divorce attorney at Moskowitz Law can guide you through the asset division process and work with you to make sure your best interests are protected in your divorce. Schedule a free consultation today to get started.