What will happen to your business in your divorce?

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What Will Happen To Your Business In Your Divorce

Many married couples in New Jersey find that starting a business together is the best way to support their families and work toward their goals. However, if the couple eventually decides to get divorced, both parties may be concerned about what will happen to the business they worked so hard to build.

Is the business marital property?

The first step is often to determine whether the business assets are marital property. If the business was started by one spouse prior to the marriage and the other spouse did not contribute to the business during the marriage, it is likely that the business will be classified as separate property and will not be divided in the divorce.

However, if the business was started during the marriage and marital funds were used to fund the business, it will likely be considered marital property.

In many cases, a business can have a combination of separate and marital assets. Only the marital assets will go through the property distribution process.

What is the value of the business?

If part or all of the business is considered marital property, the court will need to determine the value of the business before deciding how to distribute the business assets.

There are several ways to determine the value of a business, including:

  • Asset approach: Business value depends on the value of its assets and liabilities.
  • Market approach: Business value depends on current market conditions.
  • Income approach: Business value depends on income business will likely bring in.

Options for divorcing business owners

Based on the value of the business and several other factors, the court will decide how to proceed most effectively. If you are getting a divorce, there are a few possibilities for the future:

  • Continue to work together: One option may be to continue running the business with your ex-spouse, even after the divorce is finalized. However, this is not ideal for many couples, as they find it too difficult to continue working together after everything that has happened.
  • Sell and divide up the proceeds: New Jersey is an equitable distribution state, meaning that marital property must be divided “fairly and equitably.” While this does not mean that your business will be divided up evenly between you and your ex, there is a good chance that the court will ask you to sell the business and divide up the proceeds.
  • Buy out your partner: You pay for your spouse’s share of the business and run it alone, or vice versa.

It is not easy to go through a business divorce, especially if you do not have a prenuptial or postnuptial agreement. An attorney specializing in small business law can help come up with the best way to manage your business affairs and protect your finances.


Michael Ritigstein is a Founding Partner of the firm concentrating his efforts in supporting the firm's litigation, corporate and estate matters. Mr. Ritigstein graduated from the University of Delaware in 1996 and Seton Hall University School of Law in 2000. In 2007 he received a Masters of Law in Taxation with a concentration in Estate Planning, from Temple University's Beasley School of Law.

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