Divorce is perhaps one of the most stressful things a person can experience. So is carefully tending to the health of a business over many years. For that reason, business owners often worry about the consequences of a divorce on the enterprise they’ve been nurturing for so long. Read on to learn how to protect your business. A Mountainside family law lawyer can help you during this difficult time.
What Might Happen to My Business if I Get Divorced? Types of Property in New Jersey
New Jersey recognizes two types of property that a couple may own: separate and marital property. You can protect your business by understanding this distinction.
When talking about divorce law, separate property belongs only to one of the spouses involved in the marriage. Separate property could be assets that they obtained before getting married, assets obtained after filing for divorce, assets the spouse received through gift or inheritance, and assets included in a pre- or postnuptial agreement.
Marital property refers to assets obtained by either spouse during the marriage as well as anything earned using those assets, unless otherwise agreed. Debts are also considered marital property debts, though these may be separate property debts if the creditors specifically wanted one spouse to pay with their separate property.
In a divorce, spouses keep their separate property, but their marital property is divided. New Jersey is an equitable distribution state, so marital property must be divided fairly between the spouses, but does not have to be divided 50/50.
How Do I Keep Ownership of My Business in a Divorce?
There are several legal tools you can use to protect your business during a divorce. It’s important to bear these in mind early, as you may need to take some steps long before divorce talks begin.
In a prenuptial agreement (or a prenup), the spouses make a legally binding agreement before the marriage starts detailing how they will divide up their assets. This can involve difficult concessions between future spouses, such as who keeps the marital house and who keeps businesses started during the marriage. Nevertheless, the benefit of a prenuptial agreement is that these issues are clearly laid out early in the marriage. Doing so can help avoid potential clashes later.
Courts are sometimes wary of postnuptial agreements (postnups), but they are still an option open to you. Postnuptial agreements are the same as prenups, but signed after the marriage began. The timing may sometimes influence a court to think one spouse used undue pressure, but if you can speak to the lack of pressure with evidence, a postnup may be helpful.
Buy-out & Co-ownership
Buy-outs are expensive, but provide a great deal of certainty for protecting your business. If both spouses have an ownership interest in the business, which may happen if both spouses contributed to it, then the spouse who wishes to keep the business may buy the other spouse’s ownership shares.
Alternatively, if the current spouses (to be former spouses) can cooperate, they may decide to co-own the business. Both would maintain an ownership interest in the company even after the end of the marriage, though it isn’t necessary for both to be involved in running the business.
Hire a New Jersey Family Law Attorney Today
You’ve likely put years of hard work into your business. Seeing it in danger of changing hands because of a divorce is the last thing you want. Family law provides a variety of mechanisms by which to keep your business safe, and we will do everything we can to guide you. Please call us today.