Friday, July 21, 2017
As an experienced New Jersey Divorce Attorney I am often asked what happens to a marital owned business following a divorce. When you are a business owner, and let’s say you own a delicatessen. You’ve opened that delicatessen up during the marriage, and your wife has worked in that business with you; however, the business is titled in your name or in your company’s name, of which you are the president and your wife is not an officer of the company. Yet she works in the delicatessen various times during the day, and she also has the kids at home that she takes care of while you run the deli primarily on your own. That asset acquired during the marriage is going to be what we would call a joint asset.
However, when this particular asset or business is valued, forensic accountants are brought in. You could have either a mutually-agreed-upon forensic accountant or you could each hire your own private expert, which will become very costly. The court usually says let’s hire one accountant first, one unbiased accountant, and let’s see what they come up with as a value. If you both think it’s in the ballpark and you don’t have too many problems with it, we’ll stay with that value. However, you each retain the right to hire your own forensic accountant to challenge the court-appointed or the mutually-agreed-upon accountant’s value.
In general terms, let’s say that the husband is working the delicatessen most of the time and the wife is helping out when she can when the kids are in school or in the hours she can give. That would probably be the usual situation. When that asset is valued, the non-working or the not primarily working spouse of that deli, or if she didn’t work at all and she just took care of the children at home, that spouse would receive, in general terms, a third of the value of that business.
If the wife was working as much as the husband and also tending to the children, she could possibly argue that she should get 35% or 37%. Again, there are no bright lines to how much each business will be divided by and as to what each party will receive, but the fact remains that a closely held family business is indeed an asset that needs to be valued and will be equitably distributed. Again, not equally distributed, but equitably distributed. It’s very important that you understand it’s not equal distribution; it’s equitable distribution.
Are you worried about what is going to happen with your marital owned business during your divorce? If so, contact the experienced New Jersey Divorce Attorney Salvatore Simeon.
This educational blog was brought to you by Salvatore Simeon, an experienced New Jersey Divorce Attorney.