Protecting the rights of business owners and families
Divorce is a complicated matter. When a business is involved, a complicated matter can get overwhelmingly complex. When a business is a significant asset that supports a family, no one wants to impact its functionality and success in any way. When a business is marital property, it must be addressed in the equitable distribution of assets, per New Jersey law, unless agreed outside of court. Whether one person operates the business or both do, if it is considered marital property, both parties should have some entitlement to the value of the business. When a couple engages in a volatile, hotly contested case over the valuation and allocation of assets, a business can be quite vulnerable. If you are getting divorced and believe that a business will be a significant matter for the court to address, contact Ross & Calandrillo, LLC. Our firm is ready to assess your legal matter, guide you through your options, and passionately fight for your interests, contact our firm for a consultation.
Marital property and businesses
Before New Jersey can equitably distribute property, they must decipher between marital and separate property. If a property falls under marital property, its value will factor into the allocation of assets and the court will follow some general guidelines to do so. Equitable means “fair and just”, not always ending in an even split. When a court needs to assign a value to a business, it can lead to a degree of vulnerability.
Assigning value to a business can lead to trouble
Valuation can be a serious burden to a business owner. For a court to assign value, they must understand how the business functions. A business could be subjected to an assessment of forensic accountants and other financial experts that will dive into the books and other means of creating a clear picture of profits and function, helping determine a value. When a court orders these experts to assess a business, any discrepancies could be shared with the Internal Revenue Service, leading to further trouble.
Protecting one’s business
There are ways to protect a business from the pitfalls of a litigated divorce. If the couple jointly owns the business, they can execute a shareholder agreement, valuing each party’s interest in the company, detailing ownership if the couple divorces, and restricting the transfer of ownership. Setting up a contract before a divorce can be a powerful tool in protecting the business from the prying eyes of the court. Furthering that point, if one party owns the business before the marriage starts, the couple could execute a prenuptial agreement establishing the business as separate property or establishing what would happen in the case of divorce, separation or death. These protective measures can help protect a business and save its value in a divorce.
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Contact a Union County business divorce attorney
Business owners need to protect their most valuable asset. It is important to take measure to mitigate the effects of the divorce on a business, especially if it is the sole income of the family. Even if both parties agree that the business should be split evenly, valuation can take its toll on company morale and lead to further financial problems. If you need an effective attorney to help protect your business, contact Ross & Calandrillo, LLC.