The dissolution of a marriage can quickly take its toll both financially and emotionally in New Jersey. The financial impact of divorce can especially be felt by business owners. A couple of tips may help with protecting a family business from the potentially dire consequences of the divorce process.
As a business grows over time, a couple may end up having all of their net worth wrapped up in the company during the course of their marriage. As a result, there is not enough cash on hand for either spouse to do a buyout of the business. In this situation, the business might have to take on a hefty debt load or even be sold in the event of a divorce.
One mechanism that may be helpful for protecting a business from divorce prior to getting married is to create a buy-sell agreement. This is also called a buyout agreement. It is essentially a contract between the co-owners of a business that dictates what happens if one of the owners is forced or decides to depart from the business. In the case of a divorce, such an agreement would require an ex to sell all interest obtained in a divorce settlement back to the owners of the company at a price established by a particular valuation method.
Divorce can be complicated for people at all levels of income and with varying quantities of assets. However, it can be particularly complex for business owners and those with high-value assets. An attorney can offer guidance on how to fight for the most personally favorable outcome during the process of asset division in a divorce proceeding in New Jersey.
Source: marketwatch.com, "How to protect your family business during a divorce", Daniel Thompson, Feb. 10, 2017