Dividing a family business can be a challenge for New Jersey couples who are ending their marriage. They will need to have the company appraised and make a decision about whether they want to sell it.
Selling it may sound like an easy way to cut financial ties with an ex-spouse and to get rid of an asset that has painful emotional associations. It can leave both parties free to pursue other opportunities, but it may not happen right away. The process of selling the business may take time and cause the divorce process to last longer as well. While this is going on, one or both spouses will still need to keep the business running or find someone who can.
Both spouses may want to keep the business, and this can work well if they are able to remain business partners. However, it is more common for one spouse to leave the business and get bought out by the other spouse. Directly purchasing a spouse’s shares is usually not considered a taxable event if it is part of the divorce settlement, but this requires liquidity. People who do not have the resources on hand for this might opt for a promissory note with payments to be made over a specified period.
A high-asset divorce may also involve other complex divisions of property. Some couples may have a prenuptial agreement, but this could be challenged if it is not prepared correctly or one party was coerced into signing it. Like a business, collections that must be divided also have to be appraised, and it can be difficult to arrive at a figure everyone agrees on.