Dear Cassie: What happens to a business in a divorce matter?
-B.W.
Dear B.W.:
Under New Jersey law, a business is subject to equitable distribution like any other asset.
However, unlike other assets such as bank and retirement accounts, the value of a business is not usually readily apparent. Usually, a forensic accountant will need to be retained, to review the books and records of the business and to determine its value. It is that value which is then subject to claim by the non-titled spouse. Rarely does equitable distribution of a business result in a change of ownership of the business; usually, there is a dollar credit owed from the titled spouse/business owner to the non-titled spouse, for his or her equitable share.
Factors which can influence valuation of a business and/or the non-titled spouse’s equitable distribution rights include: whether the business owner owned the business prior to marriage; the non-titled spouse’s contributions to the growth and success of the business; the length of the marriage; the age of the business owner; and the risks associated with the continued operation of the business. This is a non-exhaustive list.
If you need assistance with equitable distribution of a business, you should seek the advice of matrimonial counsel.
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Cassie Murphy is a divorce and family law Partner with the Law Offices of Paone, Zaleski & Murphy, with offices in Red Bank and Woodbridge.
