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What to do with a family business in divorce

New Jersey couples who are ending their marriage and who own a family business may be concerned about how they will protect that business or divide it during a divorce. Having one person buy the other out involves needing to get the business valued, and this can be expensive. Furthermore, neither individual may have access to the cash flow to buy out the other if their assets are largely tied up in the business. Taking out a bank loan or creating a property settlement note might be one solution.

Continuing to run the business as co-owners might be an option if the two are able to manage the emotional difficulties that could result. Couples who choose this approach should create an agreement that allows each of them to buy out the other.

Selling the business may be the best solution. It allows couples to dissolve the financial ties between them completely. However, if the business is one that will be difficult to sell, this could take time. Ideally, a couple would have a prenuptial agreement to address what becomes of a business in case of divorce. However, people often do not want to discuss such a possibility when they are focused on getting married.

A high-asset divorce may present complications in dividing other assets as well. For example, there might be real estate in other states or valuable collections. Couples might be able to work out an agreement in which each person keeps entire assets if their values are similar. For example, one person might keep a vacation home that they use more often while the other person might keep an art collection that they are attached to. However, people should be sure that they understand the value of and expenses associated with assets such as the cost of maintaining a house.

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