How Are Business Assets Divided in a New Jersey Divorce?
Getting a New Jersey divorce is complicated enough when the marital estate consists of a home, savings accounts, and retirement funds. When one or both spouses own a business, the process becomes significantly more complex.
A business is not just an asset with a number attached. It represents years of hard work and both personal and financial investments. Our Red Bank divorce lawyer explains how New Jersey courts approach the division of business assets in divorce and what business owners need to know to protect what they have built.
Is Your Business a Marital Asset Under New Jersey Law?
In a New Jersey divorce, only marital assets are subject to equitable division. Under New Jersey Statute 2A:34-23, when determining whether an asset is marital or non-marital, courts consider the asset’s origin, each spouse’s contributions, and the overall financial picture of the marriage.
Situations that could make your business subject to equitable distribution include:
- The business was started during the marriage using joint funds or shared effort.
- You started the business before you were married, but it has increased substantially in value since.
- Your spouse contributed directly to the business through labor, management, or financial support.
- Marital income was reinvested into the business rather than paid out as compensation.
- Your spouse drew an artificially low salary, effectively building equity at the expense of marital finances.
Unfortunately, equitable division may apply to business assets in a New Jersey divorce, even if the business was owned entirely by one person.
The Importance of an Accurate Business Valuation
If the court determines your business is a marital asset, the next step is determining what the actual value is. Options available include:
- The income approach values the business based on its earning capacity over time.
- The market approach compares the business to similar companies that were recently sold.
- The asset approach calculates the total net value of the business’s tangible assets.
- Enterprise goodwill represents the business’s reputation and is divisible in New Jersey.
- Personal goodwill, tied to the individual owner’s skills and relationships, is generally not divisible.
An accurate business valuation is vitally important, as it can also affect other divorce negotiations and the total amount you are entitled to in a final settlement. However, both spouses typically retain separate valuation experts and may use different methodologies, leading to dramatically different conclusions.
To protect your rights as a business owner, get professional legal help from a divorce lawyer experienced in New Jersey business matters.
Schedule a Consultation Today With Our Experienced Red Bank Divorce Lawyer
When going through a divorce in New Jersey, protecting your business is a top priority and requires early planning and experienced legal guidance. At Sanvenero & Cittadino Law Office, our Red Bank divorce lawyer works with business owners to protect their interests, challenge inflated valuations, and get the best possible outcome under New Jersey law.
To schedule a consultation, give us a call or contact us online today. We represent clients in Shrewsbury, NJ; Monmouth County, NJ; Central New Jersey; and throughout New Jersey.
Sources:
lis.njleg.state.nj.us/nxt/gateway.dll
njcourts.gov/courts/family
nj.gov/state/bac/assets/pdf/njbac-doing-business-in-nj-guide.pdf