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Bucks County Divorce Attorneys > Blog > Divorce > How Entrepreneurs Can Protect Their Businesses During Divorce

How Entrepreneurs Can Protect Their Businesses During Divorce

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Separating from a spouse can lead to asset division complexities, and this is often the case when a marriage includes a business owned by one or both spouses. If you know your marriage is headed toward divorce, juggling the emotional impacts of dissolving a marriage while safeguarding your business interests can be daunting.

To talk through your options, including how to value a business and if there is a path to settling with a soon-to-be-ex spouse without selling the business, connect with an experienced Bucks County family attorney. Lawyers are available to answer all of your questions and shed light on how businesses are treated during divorce in the state of Pennsylvania and neighboring New Jersey.

Many Individuals Own Businesses

Entrepreneurship is thriving in America, and a significant number of individuals own their own businesses. In Pennsylvania alone, small businesses account for a substantial portion of the economy, employing millions of people and contributing to local communities. Similarly, in New Jersey, entrepreneurs drive innovation and economic growth, with businesses spanning a range of industries.

Of course, even when a person is thriving professionally they may not be happy in their personal life. In some of these situations, unhappiness is due to marital strife. Then, a business owner may decide to end their marriage, and the fate of their business becomes a central concern. Contrary to common misconceptions, divorce does not automatically mean the business must be sold. The treatment of the business during divorce proceedings depends on several factors, including whether the business is considered marital property.

In both Pennsylvania and New Jersey, assets acquired during the marriage, including businesses started or expanded during the union, are viewed as marital property. This means that businesses established prior to marriage or inherited during the marriage may be classified as separate property, depending on the circumstances.

Determining the Value of a Business

Valuing a business requires a thorough assessment of its assets, liabilities, cash flow, market value, and other relevant factors. Depending on the complexity of the business and the extent of its assets, valuation methods may vary, ranging from income-based approaches to asset-based methods or market comparisons.

Once a value is in place, the next step is to determine how it will be treated in the divorce agreement. Divorcing spouses may opt for a buyout, where one spouse retains ownership of the business by compensating the other spouse for their share of the business’s value. Or spouses may choose to co-own the business post-divorce, although this arrangement requires careful consideration and cooperation.

If spouses cannot reach an amicable agreement regarding the business’s division, a court may make determinations based on equitable distribution laws. Discuss the advantages and disadvantages of a court determination with a Bucks County family attorney.

Could you use advice on how to put a monetary value on your business? Divorce does not automatically result in the dissolution of a NJ or PA business, but you should talk to the skilled  lawyers at Kardos, Rickles & Hand to learn more about how your business could be treated and divided. Call 215-968-6602 to schedule a confidential consultation.

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