Although few New Jersey couples enter a marriage with the expectation that their relationship may end in separation, divorce is an unfortunate possibility. Since approximately 50 percent of all marriages end in divorce, spouses who own businesses or substantial property should take steps to protect themselves.
If a person starts their business before getting married, signing a prenuptial agreement can save headaches later on. The prenuptial agreement can specify what will happen to the company in the event a divorce occurs. In order for the prenup agreement to be enforceable, the document must be in writing and executed voluntarily with witnesses present. If the couple does not want to sign a prenup, they could create a buy-sell agreement instead. This allows one person the ability to buy out the other person so that the business does not fall apart.
Another way to protect a family business is to use a trust. A trust allows parents to make business-related gifts to their children without fear that their children’s future spouses will take some of the assets by getting married and then divorced. While this option works for many high-net-worth couples, it often cannot be used to protect a family business during a divorce.
During the divorce proceedings, the former couple will have to divide up marital property. A family law attorney may help with this process. If the one party claims that they should be entitled to some of the business assets, the attorney may provide evidence to support or disprove those claims.
