On its own, divorce is a complex process. However, when a couple co-owns a business, it becomes even more complicated due to the intermingling of personal and professional assets.
Dissolving your marriage presents unique challenges for business ownership and requires careful consideration.
What will happen to the business?
Here are some options for divorcing couples who are business partners to consider:
- Sell the business and divide the proceeds between the spouses. This provides both parties with an opportunity for a clean break and a fresh start. However, selling a business may take time.
- Have a buyout agreement where one spouse buys the other’s share of the business. This can be achieved through a lump sum payment, structured payments over time or exchanging other assets of equivalent value.
- Some divorcing couples choose to continue co-owning the business after the divorce. Establishing clear roles, responsibilities and decision-making processes is essential for this type of arrangement.
New Jersey is an equitable distribution state when it comes to dividing assets during divorce proceedings. All marital property, including a co-owned business, is divided fairly but not necessarily equally.
If the couple decides to sell or one wants to buy out the other’s share, determining the business’s value is critical. Factors such as revenue, assets, liabilities, market conditions, and future earning potential are considered in assessing the business’s worth.
Exploring alternative dispute resolution methods like mediation can help spouses reach an amicable decision on business ownership and asset division. It is imperative to work with someone who can provide valuable insight and review your options. They can help ensure that your rights and interests are protected.