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Will your business be a casualty of your divorce?

On Behalf of | Aug 7, 2021 | Divorce

One of the tragedies of divorce is watching the life you built together break in two, one object at a time. The furniture, the house, the cars, perhaps even your pets are on the table for asset division, and New Jersey’s equitable distribution laws do not always make it easy to predict how things will turn out. This may be especially concerning if your business is on the line. 

If you and your spouse are fortunate to be handling this part of the process without the intervention of the courts, you may feel like you have more control. Nevertheless, the court will still approve or reject any divorce settlement you reach. While you want to be certain to arrive at an agreement that will be fair to both sides, you also want every opportunity to protect the hard work and investment you have put into your business. 

5 options for your company 

Factors affecting the outcome include when you started the business, how involved your spouse has been in its operations and support, and whether you established any safeguards from the start. Ideally, you and your spouse signed a prenuptial agreement that keeps your business off the table. You may also have placed the company in a trust, making the trust the owner of the business. Keeping your business assets separate from your joint accounts is critical. However, if it is too late for these steps, you have the following choices: 

  • Agree to giving your spouse other assets in exchange for his or her interest in the business. 
  • Sell part of your stake in the business to finance a fair trade with your spouse. 
  • Agree to pay your spouse installments over time for his or her share of the business. 
  • Continue to own the business together with a sound contract between you. 
  • Sell the company and split the proceeds. 

Liquidating the business is not ideal, especially if it is the source of your income. Additionally, you are not likely to obtain the full value of the company if you sell. However, whether you decide to sell or try another option, you will be facing the complex process of valuating the business and its assets 

Divorce can be devastating to a business. It can drain your time, your resources and your emotions. You may find it impossible to focus on daily operations, and your staff and clients may begin to lose confidence in the company. It is important to prevent these things from happening because, no matter the outcome, you will want your business to retain as much value as possible throughout the divorce.