Why Is the Accurate Valuation of My Business Important to My Divorce Proceedings?

The fair and equitable division of assets during a New Jersey divorce is often one of the most difficult items you and your skilled divorce lawyer must determine. The New Jersey divorce courts insist that you and your spouse are treated fairly regarding spousal and child support issues, as well as equitable distribution.

Even though this is changing, in many marriages, the man is still usually the primary source of income. Additionally, suppose the man (or either partner) owns a business. In that case, their asset valuation can be significantly more legally and financially challenging (as you’re not just getting a W2 that clearly states your income).

So, as a business owner, you must accurately prove your earnings and any other financial gains (such as stock holdings, etc.) that your business affords you.

The only meaningful way to prove your business’s total asset value is to have a professional valuation done, which will, in detail, determine its total value. Also, unlike simpler forms of income, businesses may have good years and bad, and as your bottom line varies, so may your income and asset base.

Therefore, if you own a business, it’s virtually unavoidable that its value must be determined accurately during a divorce.

Your experienced and knowledgeable Morris County divorce lawyer will almost always want a total valuation of your business done so that your assets and debts are made clear, and they negotiate the best possible financial outcome for all concerned; just because you’re a business owner, you shouldn’t be taken advantage of.

What May Happen If My Spouse Disagrees With My Businesses’ Valuation?

This is common, as your spouse may inflate or disproportionately view your business and not have a clear overall picture of its assets and debts.

This is why you must have an expert valuation of your business and be able to stand by their opinion in court. By having a professional evaluate your business’s worth, you can credibly show its true worth and have the necessary documentation to substantiate your numbers.
In most cases, you and your spouse may each hire a professional business appraiser, so you (and your lawyer) are positive you are protecting your rights.

Your experienced divorce lawyer will always explain that simply accepting your spouse’s expert’s valuation is always a bad idea; after all, your spouse is paying for their services. It’s always best if both experts arrive at similar conclusions about the valuation of your business holdings, but of course, that doesn’t always occur.

Your divorce lawyer’s negotiating skills will prove invaluable in determining and negotiating the valuation amount with your spouse’s lawyer and expert. Your business valuation could affect many more dire decisions in your divorce, and you must have a Morris County divorce law team that is well-versed in this critical area.

How Is My Business Valued in My Divorce Proceedings?

Assets are divided equitably between the parties. What does that mean? Explained legally, any of your business assets are similar to other jointly owned assets such as your primary family home, vacation homes, vehicles, art, retirement assets, and much more.

The significant difference is the difficulty of accurately determining the exact value of your business, the income you make, etc. However, it would be best if you never underestimated how important this calculation can be, as it usually may impact many other decisions that must be made, such as alimony, child support, and practically all other financial matters.

In the New Jersey divorce courts, marital property is often broadly defined as all property and assets acquired during marriage. However, it commonly doesn’t include gifts given directly to you or your spouse by a third party or any assets individually owned by either of you. It does include some items you may not like, such as total debt.

Some examples of shared assets and properties that may be considered marital assets are;

  • All owned property or real estate.
  • All types of vehicles, such as cars, RVs, etc.
  • Furniture, furnishings, and collections.
  • Retirement and financial assets.
  • Family-owned and private businesses
  • Pets and other animals, such as racehorses, etc.
  • Your total household debt, including mortgages, credit cards, loans, and more.

You can see that many of these items’ dollar value and worth are quite easily determined; this is not the case with a family business.

However difficult it may be to value your business, this final determination is one of the most significant parts of your divorce proceedings. Therefore, the only prudent plan is to ensure that the valuation is done by a skilled and experienced professional and analyzed by a professional divorce law team with the experience and knowledge to interpret these values and successfully fight on your behalf.

What May Occur If My Spouse Is a Part Owner of My Business?

Suppose your spouse is involved in your business. In that case, New Jersey law still requires an equitable division of these business ownership interests or the growth in value of such interests that occurred during your marriage.

If you and your lawyer negotiate this type of equitable division, it can be successfully handled in a few ways.

New Jersey divorce courts could split ownership between spouses, including corporation shares or LLC units. However, this could be complicated and violate your company’s governing agreements.

In some cases, the New Jersey court may grant one spouse a larger share of the remaining marital estate to atone for the business interest this spouse should have received.

Another valid solution would be for one spouse to agree to a buyout of their ownership interest in the business. This could also get legally complex, but depending on the cooperation and relationship between you and your spouse, it may be the best path.

If you and your spouse are involved in the business, you may feel that this adds another layer of complexity to the issue; it usually does. However, be assured that your divorce lawyer, well-versed in asset distribution, will have the previous experience necessary to help ensure the outcome is suitable for you and your business’s future.

I’m Divorcing in New Jersey and Own a Business; What Should I Do?

Most divorces are messy, emotional, and sometimes highly confrontational. If you own a business, then the valuation of that asset and equitable distribution can be legally complex, exhausting, and costly. Therefore, in a divorce of this type, you must have a lawyer with a significant depth of knowledge who can help you financially evaluate your business (and gather the team to do so) and provide you with the experienced, legally sound guidance you need.

Since 1994, the Morris County-based Edens Law Group has successfully navigated the equitable distribution process for business owners and managed the complex legal issues that arise.

Call them today at 908-529-0353 and get the professional expertise and in-depth, passionate legal representation you need for this critical part of your divorce.