When you establish a business, it’s no secret that a considerable amount of time will go into your company. As such, it’s vital to understand how this is handled during a divorce. Unfortunately, many assume their business will be excluded from the divorce, which is far from the truth. In reality, this is treated as any other martial asset. If you are a high-net-worth-individual going through a divorce and unsure what will happen to your business, the following blog can help. You’ll discover how your company will be treated and how New Jersey high net worth divorce attorneys can help protect your business.
How Are Businesses Handled During a Divorce?
When divorcing, knowing what will happen to your business is crucial. If you established the company while married, it is considered marital property in New Jersey. However, if you created the company before you were legally married, you may be able to keep it as separate property.
If your business was established before the marriage, it may still be deemed marital property if you comingled it with joint assets. For example, if you take martial funds to invest in your business, it would likely be considered marital property.
Once it’s determined whether or not your business is marital property, the business will need to be valued. Generally, this means financial experts will come in and examine a number of factors to determine an accurate value of the business.
Finally, the courts will need to determine your spouse’s claim to the business, if it is marital property. New Jersey is an equitable distribution state, meaning spouses are not entitled to an equal share of marital assets. Instead, the property is divided based on how much each party contributed to the marriage, financially and domestically. For example, if your spouse gave up their career to stay home and raise your children so you could focus on growing your business, that would be considered contributing to the marriage.
What Can I Do to Protect My Business?
If you are worried about what will happen to your business when you and your spouse divorce, there are steps you can take to help shield your company from this legal issue.
Creating a prenuptial agreement that details what will happen to your assets and property upon divorce is one of the most effective things you can do to protect your business. However, this is only applicable to those who are not yet married.
When you notice that your marriage is not going in the right direction, you may want to establish a trust fund. This allows you to transfer ownership to the trust. Because the business is held in the fund, you are not considered the owner, and it will not be deemed marital property.
If you are the sole owner of the business, the courts may award your spouse additional assets to make up for the difference in property division.
When going through a divorce, ensuring you have a dedicated attorney on your side to guide you through this process is vital. At Haber Silver Russoniello & Dunn, we understand how complex assets can be. As such, our firm is committed to handling these assets with care to help you achieve the best possible outcome when divorcing. Contact us today to learn how we can assist you during your high-net worth divorce.