For entrepreneurs, the most vulnerable party in a divorce is likely the family business.
Our Monmouth County divorce lawyers reported recently on the split of Amazon founder Jeff Bezos, which will likely be the largest, costliest divorce in U.S. history as Bezos is currently the richest man in the world. But the reality is Bezos will be fine. Many smaller, family run enterprises are not as fortunate, and some do not survive a divorce.
As Forbes recently reported: “If you own a business, it’s important to protect your interests in the event of a divorce, no matter how inconceivable the notion may seem at the moment.”
Building a business is hard work – almost always harder than working for somebody else. In most cases, even when one spouse is primarily responsible for operating a business, the other spouse has made numerous contributions and sacrifices on the road to success.
When it comes time to divorce, the business is often the biggest asset. Yet most small enterprises have little or no equity. Cashing out can involve liquidation, while being forced to stay in business together can tether you forever to a former spouse.
Prenuptial Agreements and Family Businesses
Establishing a prenuptial agreement is among the best things you can do to protect a business.
Such agreements can outline how, and if, a business will be divided in the event of separation. It can also value a business at the start of a marriage, which will reduce later conflict, as value added after date of marriage will be considered marital property and subject to division.
Our experienced divorce lawyers in Monmouth County have written previously about the misconception that prenuptial agreements are only for the rich. The fact is, it’s irresponsible to enter a marriage without protecting a business. The same business person who would do so would likely not purchase $10,000 worth of new equipment without a signed contract.
Entrepreneurs and Divorce in New Jersey
Absent a prenuptial agreement, there are other steps you can take:
- Make sure business ownership is clearly defined in corporate documents.
- Keep accurate financial documents of marital and non-marital contributions.
- Keep your personnel expenses separate from the business.
- Understand the market value of your position, regardless of what you pay yourself, as it may determine your alimony and support obligations.
- Pay a spouse market rate for working in the business.
Business owners considering divorce in New Jersey should seek early advice and assistance of a family law firm with significant experience in handling these types of cases.
Call Rozin|Golinder Law, LLC today for a free and confidential consultation.