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Steps to take when divorcing as a business owner

On Behalf of | May 10, 2021 | Divorce |

Marital property in New Jersey includes all assets acquired during the marriage, including a business. Even if your company existed before you met your spouse, he or she could receive a portion of the value increase.

Take these steps if you plan to separate from your spouse and you own a New Jersey business.

Update the business agreement

You should have a contract in place that establishes ownership percentages for your company, especially if you have partners. This document can indicate the amount each owner’s spouse would receive in the event of a divorce. Generally, the court will honor a valid business agreement of this kind. You can also establish the business as separate property in a postnuptial agreement if your spouse agrees to sign.

Establish separate accounts

If you do not already completely separate your personal finances from your business records, do so as soon as possible. Maintain detailed business records that clearly distinguish these funds from your household funds.

Document everything

You should take an official salary for your role in the business and pay your spouse a salary if he or she takes part in company operations. Doing so allows you to illustrate that you contribute to the household income.

Keep careful documentation of your spouse’s involvement with the business. If he or she has limited input, that may translate to a limited claim to its profit.

Obtaining a professional appraisal of your company can help inform the division of property when you divorce. New Jersey is an equitable distribution state, which means you and your spouse must come up with a fair arrangement.

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