New Jersey is an equitable distribution state, which could be good news for your family business if you and your spouse have to let a judge make your final decision about property division for you. Equitable division means that a court should divide your marital assets in a fair way, but that does not necessarily mean an equal split.
However, it would probably be in your best interests to reach some sort of compromise with your spouse regarding your business. Here are some of the possible solutions you could reach in order to keep operations as smooth and profitable as possible.
One solution could be to turn to your prenuptial agreement. If you started your business before you got married — or if you own a business you took over from your pre-marital family — you probably have some terms in the agreement that regard the division of the company’s assets. If you do not think that the terms fit currently, you should probably ensure that your spouse agrees with your assessment before you attempt to divide the business in another manner.
If you and your spouse could continue running the business without any conflict, then it could be a good idea to continue on with a new partnership contract. This could work if you started the business as a joint venture during the marriage and have both contributed to it equally, for example. You would essentially be transferring the default joint ownership you had from your marriage to a separate business contract. In fact, at least as far as the IRS requirements on reporting partnership income were concerned, very little would have changed at all.
If either you or your spouse was not interested in operating the business but felt that some compensation was due, then that value could come out of other assets in the estate. For example, the business and its holdings could remain intact and under one spouse’s control while the marital home went to the other spouse.
All of these options and more could be available to you, depending on your situation. Of course, actual divorces are not usually as simple as the brief examples described in this article. Therefore, please do not take this as any type of legal advice. It is only meant as background information.