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Dealing with a small business in a New Jersey divorce can prove to be a daunting task. Small business owners in New Jersey need to be aware of a few crucial facts to ensure that their business interests are protected during a divorce. There are seven essential points that we discuss in regard to the matter of a small business in a New Jersey divorce.
New Jersey is an Equitable Distribution StateNew Jersey is an equitable distribution state when it comes to the division of marital property and distribution of marital debt. What this means to a divorcing couple who own a small business is that marital property is divided equitably between the spouses during a divorce. Marital assets, including a small business, are divided between the parties in a fair and equitable manner. This does not always mean equal distribution of assets and debts.
Small Businesses are Considered Marital PropertyIf the small business was acquired or developed during the marriage, it is considered marital property, subject to equitable distribution. Generally speaking, this means that both spouses are entitled to a portion of the business. In many instances, the value of the business is determined by a professional business appraiser who will consider a range of factors that include:
In some cases involving a small business in a New Jersey divorce, the parties agree on a valuation for the enterprise.
Business Records are CrucialDuring a divorce, both spouses are required to provide full financial disclosure. Business records, including tax returns, profit and loss statements, and balance sheets, are crucial in determining the value of the business. It is important to keep accurate financial records of the business, especially during the marriage, to ensure that the value of the business is not under or overestimated.
Buyout or Sale May be RequiredIn some marriage dissolution cases, one spouse may be required to buy out the other spouse's share of the business. In some other cases, the court may determine that the business must be sold and divide the proceeds divided between the parties in a fair and equitable manner. This decision will depend on the value of the business and the financial situation of both spouses. It is important to consult with a knowledgeable divorce attorney and financial advisor to determine the best course of action. It is also essential to have a clear understanding of the business's financial situation and to explore all available options.
A Prenuptial Agreement can Protect the BusinessA prenuptial agreement is a legal agreement made between two individuals before marriage. It can help govern what happens in regard to a small business in a New Jersey divorce. For example, a prenuptial agreement can outline how the business will be divided. Such an agreement might specify that the business is separate property and not subject to equitable distribution. It is important to consult with an experienced family law attorney to draft a comprehensive prenuptial agreement that will protect your business interests in advance of marrying to better protect the rights of the parties should a divorce occur.
Legal Representation is EssentialDealing with a small business in a divorce can be complicated, and legal representation is essential. An experienced divorce attorney can help protect your business and ensure that your interests are represented during the divorce process. It is important to hire an attorney with experience in handling business valuations and division of assets to ensure that your business is protected. Your attorney can also help you understand your legal rights and obligations and provide guidance on the best course of action.
In conclusion, small business owners in New Jersey need to be aware of the above facts to ensure that their business is protected during a divorce. It is important to seek the advice of a knowledgeable family law attorney and financial advisor to navigate the complexities of a divorce involving a small business. With the right legal representation and financial advice, you can protect your business interests and ensure that your business is protected during the divorce process. If you have any questions about a New Jersey divorce, call 201 845 7400 for a free consultation.