Dividing assets during a divorce can be challenging, especially when those assets include complex items like businesses. In New Jersey, the state follows equitable distribution laws, meaning that couples must divide assets in a way that is fair, though not necessarily equal. When a business enters the equation, the process becomes even more intricate.
Valuing the business
To divide a business, the couple must first determine its value. A professional appraiser typically provides an objective assessment, considering factors such as the business’s income, assets, debts, and future earning potential. If the market or business conditions change significantly during the divorce process, the couple may need to revalue the business multiple times.
Deciding on division methods
After establishing the business’s value, the couple can decide how to divide it. Several approaches exist:
- Buyout: One spouse buys out the other’s share of the business, allowing the business to remain intact while fairly compensating the other spouse.
- Co-ownership: Some ex-spouses agree to continue owning the business together. This option requires a high level of trust and cooperation, which isn’t always feasible.
- Selling the business: The couple may choose to sell the business and divide the proceeds. This approach provides a clean break but may not be ideal if both parties want the business to continue operating.
Considering other assets
In addition to dividing the business, the couple should consider how it fits into the overall property division. Sometimes, the value of the business can balance against other assets, such as real estate or retirement accounts, to create a fair division. For instance, one spouse might keep the business while the other receives a larger share of the remaining assets.
Thinking beyond the business
Dividing a business during a divorce requires careful planning and expert assistance. While the focus may remain on the business itself, couples must consider the broader financial picture to ensure a fair outcome for both parties.
