Under New Jersey law, both spouses can claim part of a business just one of them started during the marriage. Even when the company predates the marriage, the founder may have to pay his or her spouse part of any increase in value if a divorce occurs.
These strategies can help a business owner protect his or her investment under the New Jersey marital property laws.
After starting a company, the business owner can create a postnuptial or prenuptial agreement that establishes the business as separate property. This document can also indicate how the spouses will divide the company in a divorce. A firm’s bylaws or operating agreement can also serve this purpose.
This type of legal agreement should also indicate the salary the company’s owner receives. The court can perceive failure to take a salary as a lack of contributing to the household finances, which can affect the person’s share of marital property.
The company’s books should keep business funds completely separate from household funds. Otherwise, the business owner’s spouse can argue that the business is marital property because of the commingled finances.
The business owner should also keep careful records that detail whether and how his or her spouse assists in the business operation. In cases involving limited commingling of funds and spousal involvement, the court may categorize the business as separate property.
Having these safeguards in place can ensure the fair division of a business in a New Jersey divorce. They can also help expedite the process of reaching a property division agreement.