Whether your business has been in your family for generations or you've started your own enterprise, which you hope your children will carry on when you retire, it's likely crucial to your financial well-being and a big part of your identity.
Could that all be lost in a divorce? It depends. Fortunately, most New Jersey judges won't require a business owner to sell the company and split the value in a divorce with a spouse who's not a co-owner. The courts generally recognize the value of a business as a "going concern." That's an accounting assumption that a company will operate for long enough to fulfill its objectives and commitments.
However, businesses have value. Even businesses that don't have many hard assets (like law firms and medical practices, for example) can have significant value. If a nonowner spouse wants a share of that value in a divorce, things can get messy and combative.
If you own a business when you get married or if you start or inherit a business later and your spouse doesn't have any ownership of it, there are ways to protect it in case of divorce. One effective option is to include provisions about the business in a prenuptial agreement. In a prenup, the nonowner spouse-to-be can waive any interest in a business already owned or later started by their partner.
If you didn't address this in your prenup and you start a business, you can ask your spouse to sign a spousal waiver. These waivers state that the nonowner spouse won't seek ownership of the company or interfere in decisions made by the owners.
Sometimes, in family businesses that are intended to be handed down to younger generations, owners will require that the spouses of their children or other family members sign spousal waivers. This helps keep the business in the family and prevents it from being taken over or sold by someone who's no longer part of the family.
If you're in the process of forming a business that your spouse isn't involved with, you may want to review your legal options for protecting it just in case the business outlasts your marriage. Having the appropriate documents in place can save you money, time and stress later on.