A divorce can be a very difficult time for any family. Not only are the personal and emotional challenges significant, but the financial implications can be enormous. For business owners in New Jersey, a divorce can have a serious impact on their company. Here’s a summary of some possible adverse judgments, as well as some negotiating strategies that may allow you to circumvent these unpleasant scenarios.
Day-to-day operations
There’s a significant likelihood that the divorce court will award your partner a part of your business. Depending on the terms of that agreement, you may need to make major changes in how you run your company. For instance, you’ll have to accommodate your partner as a new shareholder or as a representative in key decisions. The court may also require you to open up your books and accounts to your partner and their representatives, which could impact the privacy of your business dealings.
Asset division
In some cases, it is possible for both parties in a divorce to agree that the ownership of the business should remain unchanged. However, if this isn’t possible, then the court will need to decide how to divide the assets amongst each party, including any property related to the business. This could mean that you end up losing important pieces of equipment, inventory or other resources that are critical for operations. However, if you have a loan or other financial obligations tied to the business, it is possible that your divorce decree may require your partner to pay part of those costs.
How to deal with divorce impact on business
If your partner agrees and the court approves, you can sacrifice some of your separate property or stake to other assets in order to keep the business. Alternatively, you may be able to come up with creative solutions such as a buy-out or partnership agreement that ensures that both of you benefit from the divorce settlement.
New Jersey family law always seeks to limit damage to businesses during divorce proceedings. That’s why you have the option to decide for yourselves the path you want to take with your company. If you can’t, that’s where the court may come in.