Thanks to the state’s equitable distribution provisions, yes, it is possible to retain your business after a divorce in New Jersey. The courts divide marital assets, including businesses, in a manner that they consider fair, which doesn’t always mean equally. Instead, the court looks at each spouse’s financial situation, how long they were married and how much each person contributed to their shared property.
However, another more important thing the courts look at is the timing of when you set up a business. They do so as this could affect whether you can keep it after a divorce.
Before the marriage
A business is a separate property from a marital one if you established it before the marriage. If you registered a company and built it before marrying your spouse, it would typically remain with you – the original owner – after a divorce. However, any increase in the value of the business during the marriage could be considered marital property and subject to division, especially if the growth is due to contributions of the other spouse or the use of marital funds.
During the marriage
If you built a business during the marriage, it’s generally considered marital property. The courts would regard this marital property regardless of who operated or financed it. In this case, the business or its value would typically be subject to division during the divorce. However, some strategies might allow one spouse to keep the company, such as buying out the other spouse’s share or trading other assets.
After the marriage
Any businesses set up after separation but before the finalization of divorce may be under the “separate property” classification. This means it may not be subject to equitable distribution. However, your spouse may have a claim to a portion of the business value or income in certain scenarios, such as:
- If you used marital funds or assets to support business operations
- If your spouse contributed to the business by providing labor, skills or advice
- If your spouse argues the date of separation due to it being unclear or disputable
Disputes are common. Your spouse might say that you started the business while you were married, which means it’s property that you both own. Situations like this might seem complicated, but figuring out when you started your business during your marriage is crucial. Doing so ensures you guard your best interests regarding your business.
