A couple can focus so much on the emotional toll of divorce that the legal complexity blindsides them. Property division can become particularly thorny if you have business assets. If divorce appears to be on the horizon, taking swift steps to safeguard your company can help you maintain control and protect your financial future.
Determining if your business is a marital asset
New Jersey follows equitable distribution laws, which means the state seeks to divide marital assets fairly, not necessarily equally. If your spouse contributed to the business, financially or otherwise, it might be a marital asset. As such, the entity is likely subject to division during the divorce.
The courts first look at whether you started your business during the marriage. Even a business you started before marriage may still have a portion deemed marital if its value increased during the marriage.
Taking steps to protect your business
Mixing personal and business funds makes it harder to argue that your business is separate property. As soon as possible, establish clear boundaries between personal and business finances. Use a separate business account, and document all financial activity. Show what you brought into the marriage and what you earned since to establish which parts of your business are non-marital.
Consider creating a buy-sell agreement or shareholder agreement with any co-owners. These agreements can specify how to handle shares in case of divorce. If you didn’t create one before the marriage, it’s not too late to address this with your partners now.
Another way to protect your business is by obtaining a business valuation. An independent professional can assess the current value of your business. This helps prevent disputes over its worth if division becomes necessary.
Good planning ahead can reduce uncertainty and help you protect your business during divorce. With the right strategies, you can focus on keeping your company strong for the future.
