Ask a Divorce Lawyer in Hackensack, NJ: How are Business Interests Divided in a New Jersey Divorce?
One of the tasks performed when a couple undergoes a divorce is the splitting up of assets and liabilities through a process called equitable distribution. Property is classified as separate or marital, the property receives a valuation or numerical value, and then the property is distributed amongst the spouses. If one of the spouses has a business interest, selling, splitting, and dividing the business interest adds another layer of complexity to this process. There may be contractual provisions unrelated to the marriage that determine when and how a business interest may be divided among the spouses in the event of the divorce. Also, there are statutory reasons that prevent the other spouse from owning the business interest in the event of the divorce, such as if the business interest is one of the spouse’s law firm and the other spouse is not a lawyer.
Three Most Common Methods Couples Use When Distributing a Business Interest
- Buy Out: In this scenario, one spouse buys the other spouse’s interest in the business. This method only works if one spouse has the cash to buy out the other spouse. In this circumstance, the buying spouse will transfer a lump-sum payment to the selling spouse, buying out his or her interest in any business. A structured buyout with a payment schedule is another way a business interest can be transferred from one spouse to the other. This may be an attractive option in situations in which there is limited cash on hand. When there is no cash, a business interest can be swapped with another interest in marital property of the same or equivalent value.
- Co-ownership: A business interest does not have to be distributed after the divorce. The spouses may continue to jointly own the business after the divorce. This only works if the couples maintain a relationship after the divorce and generally get along.
- Sell the Business: If the parties can not work out a lump sum or structured payment plan to distribute the business interest among themselves or can not maintain co-ownership interests post-divorce, the couple may have to sell the business and divide the proceeds. This method is not as easy as it seems because the business maybe too niche to attract buyers, will be dependent on external market conditions, and may have limits as to who may purchase it, further limiting the potential buyer pool.
Protect Your Business Interest in a New Jersey Divorce
When it comes to dividing a business interest in a New Jersey divorce settlement, the three methods discussed above are the most prevalent ways a spouse can take a fair distribution of a business interest if it is a marital asset. There are pros and cons to each method that the spouses should consider before selecting one of the methods of distribution described above in their divorce settlement.
Ask a divorce lawyer in Hackensack, NJ today about which business interest distribution method will work best for you in your divorce. Helping families with their family law, elder law, and estate planning needs in Hackensack, New Jersey, the Giro Law Firm can handle all issues relating to divorce, including child custody, child support, spousal support, and equitable distribution of marital assets. To request a confidential consultation with a divorce lawyer in Hackensack, NJ, click here or call (201) 690-1642 today.