Going through a high-asset divorce is challenging and stressful. This is especially true if it involves dividing the business you’ve worked hard to build. But what if you could take the company out of the equation?
Remember, New Jersey follows equitable distribution rules in property division. This means the court splits all assets that count as marital between the couple. If your business does not qualify as a marital asset, that is one less thing for you to worry about.
Below are three ways your New Jersey business may count as a separate asset.
If you started the business before marriage
Starting a business before tying the knot can help protect it during a divorce. New Jersey courts generally consider pre-marital businesses as separate property. However, note that the court may still consider any appreciation in value or income your business generated during the marriage as marital property.
If you signed a prenuptial agreement
A well-drafted prenup can further safeguard your business interests. This legal document allows you to exclude a business you already have from becoming a marital asset. You may also specify how you’ll handle your business in case of divorce.
Meanwhile, a postnuptial agreement may help you retain business ownership if you start a business after marriage.
If you inherited the business
Businesses you inherit or receive as gifts typically qualify as separate property in New Jersey. Whether you inherited it before or during your marriage, the court generally considers it yours alone. This rule may also apply to a business you founded using the inheritance you received.
Commingling funds turn separate into marital property
It’s important to remember that using marital funds to grow or maintain a business that counts as separate property can change its status. The law refers to this as commingling. An example is using money in your joint account to pay for business expenses.
If you commingled your separate and marital property, the court may consider your business or a part of it a marital asset – even if you started the company before your marriage. Consulting a legal professional can help you navigate your unique situation and protect your business ownership.