Mendham Divorce Lawyers: Shared Business in a Divorce
Ending a marriage can be a complicated undertaking. Even under amicable circumstances, the sorting out of shared assets like houses, cars, and property is time consuming and stressful. What if you and your spouse were business partners as well? If you are considering divorce in New Jersey you should know your options when it comes to dividing a shared business.
Equitable distribution is the process of assessing the value of a marriage’s assets and then dividing them. The court decides if an asset is shared or separate, puts a value on it, and then distributes it. This process is relatively simple for something like a car, and more difficult for a home because it first has to be sold in order to be divided. Dividing a business can be much more complicated. Generally there are three options available to couples splitting a business in divorce proceedings – selling the business, co-owning it, or one spouse can buy out the other one.
If the parties choose to exercise this option, the business is put up for sale and the proceeds split between the parties. It is an easy way to provide an equitable settlement for both spouses provided they are ready to discontinue their interest in the business. But there are disadvantages to this method. Both parties must be able to agree on a value for the business – the price for which they are willing to sell the business. During an economic downturn it may be difficult to realize this value and find a willing buyer. Moreover, the business in question may be a niche company that needs a suitable buyer thereby drawing out the time it takes to sell. Sometimes these factors force the divorcing couple to wait for more advantageous circumstances before selling.
Spouses going the route of co-ownership continue to jointly own the business although they are divorcing. This can mean that one spouse is running the business alone and the other spouse receives payments from future earnings from the business. The payments are meant to be the spouse’s share of the marital assets, so this arrangement can run into problems when business is down and profits are lower. It goes without saying that to continue in a co-ownership situation, the divorcing couple must have an amicable relationship and be willing to continue to work together in the business relationship.
Buying Out Your Partner
The buy out is the most common solution to splitting a business in a divorce. In the simplest scenario, the couple agrees on the value of the business and one spouse transfers a lump sum for half of that value over to the other spouse thereby buying out the spouse’s part. If the buying spouse does not have enough cash at hand for the lump sum, then a structured buy out can be established. Payments can be made over time according to a pre-determined schedule that is agreed to by both parties. The buy out can also be made with cash plus assets equal to the lump sum agreed upon.
Mendham Divorce Lawyers at Lyons & Associates, P.C. Help Business Owners Seeking a Divorce
If you own a business and are thinking of seeking a divorce in New Jersey, you will need the help of an experienced lawyer. The caring divorce lawyers in New Jersey at Lyons & Associates, P.C. are ready to advise you. Call us now at 908-575-9777 or contact us online. We serve clients throughout New Jersey including Somerville, Somerset, Mendham, and Woodbridge.