Let’s be honest: divorce can be plenty stressful. Whether it’s breaking the news to the kids and figuring out the parenting plan or dividing the joint marital property, divorce takes a mental toll. Add to this owning a business and having it subject to a divorce, well— you’re going to need a Family Lawyer who knows Divorce Law for Business Owners in Hackensack.
What does it mean when a business is subjected to the court’s rules for divorce?
- Businesses begun and established during a marriage are generally considered (with some exceptions) joint marital property, and subject to equitable distribution— even if only one spouse is the sole owner on paper.
- In some cases, even pre-existing businesses (separate property) have a component (an increase in value at date of marriage to date of divorce complaint), which will be considered a marital complaint, thus subject to equitable division in divorce.
- The business must be properly valued. This may mean opposing counsel hiring their own qualified forensic business accountants to review the business and its books and records and determine its valuation. If the valuations of the business by each side’s forensic accountants are too far apart, the court will weigh both valuations and make the ultimate decision, or, in some cases, appoint its own expert forensic account to perform the valuation.
It can be difficult for business owners to understand that their soon-to-be-ex-spouse may be entitled to a piece of their business. You should consult with an O’Cathain Law Group Family Law Department lawyer immediately to learn about Divorce Law for Business Owners in Hackensack.
How should I protect my business interests before divorce?
- An agreed upon, signed prenuptial agreement could potentially protect your business interest from equitable distribution.
- An agreed upon, signed postnuptial agreement could potentially do the same, but of course these are harder to negotiate and prove their enforceability.
- Keeping personal and business expenses separate, paying yourself a consistent and standard salary, and making sure your spouse does not work for the business are other potential ways to protect your business, to some extent.
How could business interests be divided in a divorce?
- Buyouts are often the most common. Depending upon the value of the business, one spouse will buy out the other spouse; in other words, if a business is valued at $100,000, and the court awards the non-business spouse a 35% interest in the business, the business owner spouse can buy the other spouse’s interest at $35,000, or by trading other marital assets. However, from a monetary standpoint this is not always possible.
- Liquidation is another option. If a buyout cannot be agreed upon, or is not financially doable, the business may be sold to a third, independent party and the proceeds may be split by the court for the divorcing parties.
- Continued joint ownership is the trickier option, but if the co-owners (though they are divorcing) feel they can still own the business together in a mutually agreeable and profitable way, it is an option. (Who knows? Not being married may help your ability to work with your ex-spouse.)
As you can tell, Divorce Law for Business Owners in Hackensack is complicated, and only one thing is certain (aside from taxes): you’ll need a qualified and dedicated O’Cathain Law Group Family Lawyer to help you Move Forward. Contact us today.
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