In a New Jersey divorce, spouses may have to decide what happens to a business owned by one of them.
For example, one spouse might not want involvement in the ownership of the business post-divorce. There are several avenues the spouses can explore.
Buyout
One option is negotiating a buyout of the business interest. In this scenario, the spouse who wants to retain ownership of the business would compensate the other spouse for their share of the business. Negotiation or appraisal of the business’s value can help determine the value of the business.
Equitable distribution
About 953,416 small businesses operate in New Jersey. If one spouse wishes to keep a business, they may offer other assets or a larger share of marital property to the other spouse in exchange. New Jersey follows the principle of equitable distribution when dividing marital assets during divorce proceedings. This means that assets, including businesses, undergo fair but not necessarily equal division.
Sale
Another option is to sell the business and divide the proceeds between the spouses. Selling the business allows both parties to walk away with their share of the business’s value without the need for ongoing involvement. The proceeds from the sale can undergo division according to the terms of the divorce settlement.
Co-ownership
If both spouses are open to co-ownership but want to clarify their respective roles and responsibilities, they can create a co-ownership agreement. This agreement can outline the management of the business, the distribution of profits and the methods for major decision-making. A clear agreement minimizes conflicts.
Mediation or arbitration
Mediation or arbitration can be valuable tools for spouses unable to reach a resolution on their own. A neutral third party can facilitate discussions and help the spouses come to a mutually acceptable solution regarding the business ownership.
By exploring these options and working together, spouses may be able to find a solution that is fair and satisfactory.