Preserving the fate of your business when divorcing in New Jersey

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Posted By | June 14, 2021 | Articles

Business owners often find the company constitutes marital property in New Jersey, even if the firm predates the engagement. The court may entitle a spouse in this situation to 50% of the value increase of the company during the marriage.

Entrepreneurs can take these steps to help shield the value and future of their companies when a marriage ends in the Garden State.

Enter an agreement

You can ask your spouse to sign a postnuptial agreement that designates your business as separate property. You can also use your business bylaws or partnership agreement to establish a certain percentage that would go to each owner’s spouse in the case of divorce.

Maintain separate personal finances

Establish distinct business and personal bank accounts and credit cards if you do not already. Your spouse can easily argue that he or she deserves a share of the business if you mix company funds with the home budget. You can also run into tax or legal issues.

By the same token, pay yourself a salary as the CEO of your company. Doing so provides another level of separation between your personal and business life.

Keep detailed records

Document the involvement of your spouse in your business. He or she may have less of a claim to a percentage of its value without participating in operations.

Following these strategies can help you keep your business solvent when you decide to end your marriage in New Jersey. You can agree with your spouse on a property division arrangement or ask the judge in your case to decide in court.