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Outcome of a family business in divorce: yes, it’s a big deal

Readers of our legal blog across New Jersey are of course familiar with the phrase “labor of love.” We submit that the term is seldom more appropriately used in the context of family law than to describe the passion and energies expended by a couple to grow a family business and guide it toward profitability.

Who wouldn’t take great pride in that?

And what couple wouldn’t focus closely on the treatment of that business creation during dissolution-related negotiations concerning marital property and its equitable split in a divorce?

A judge will. We note on our website at The Law Office of Rajeh A. Saadeh in Somerville that a family business “can be a lightning rod” in divorce, and that a court will subject it to exacting scrutiny. A judge overseeing a fair asset division will assess its income, proper valuation and ultimate judicial treatment in a divorce decree.

There likely lacks a convenient research source that accurately chronicles how many businesses are sold in divorce relative to the number that will continue to operate within a family in some manner into the future.

The bottom line is that the material fact pattern will differ in every decoupling, given the unique nature of divorce. If a marital split is notably contentious and uncivil, a court’s involvement in analyzing value, ownership, key timing considerations, governing agreements and so forth will unquestionably increase.

In other cases, though, businesses manage to endure post-divorce, even with ex-spouses continuing to run them. One interesting example of such an outcome was chronicled in a recent national media piece noting a divorced couple’s determination to keep their business relationship and related interactions intact. They simply deemed their business creation too important to let go, wanting to sustain something that promoted their core life values.

However a business plays out in divorce, it will certainly entail some complexity. A proven divorce attorney with a deep well of business experience intimately appreciates that, and additionally notes the strong emotions that can arise in business-linked discussions. We note on our website “the importance of protecting the entity as well as the spousal interest in a way that is satisfactory to both sides.”



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