Aside from children, one of the most complicated aspects of divorce in New Jersey is how the split will affect your business. Even if your spouse doesn’t contest your divorce, you may have unexpected financial implications when you divide your property in the settlement. How can you protect yourself?
Advance planning is the best protection
New Jersey is an equitable distribution state, meaning that the court makes a final determination about your marital property in a divorce settlement. If neither side can agree on a fair division, your divorce process could become lengthy and not end favorably for your business. Considerable challenges can arise during divorce, taking you away from the business and possibly diminishing profits. If your spouse is still involved in daily operations, tension can build further. When stock is involved, you can encounter other complications. If you give your spouse a share of the stock in the divorce settlement, they may become a partner, demanding a voice in how the company is run.
Ways to protect your business
Devising a prenuptial agreement spelling out what would happen in a divorce is one way to protect your business. Other possibilities include the following:
• Separating your personal and business finances
• Paying yourself an adequate salary to remain liquid
• Placing the business in a trust so you don’t own it
• Protect your business with an insurance policy
Finding a solution to dividing your assets
Even if you haven’t done anything to protect your business before your divorce proceedings, you may still have other options when dividing your assets. Among your options are selling your business outright or selling a stake in your company to have enough money for the divorce settlement. If retaining your business is essential, then selling other assets may be the answer.
Another option is making payments to your spouse over time if you want to keep your business and your spouse doesn’t want a stake in its operations. Take time to consider your options, as rushing into an agreement without considering all the implications can harm your financial future.