Division of LLCs During New Jersey Divorce

Family Lawyers Providing Guidance on the Appraisal and Division of LLCs in Hackensack, Nutley, Hawthorne, Woodland Park, and across Northern New Jersey

Divorce in New Jersey can bring up a lot of questions about who gets what assets. Because New Jersey is an equitable distribution state, each spouse receives an equitable share of assets based on a number of factors determined by the Superior Court: Family Part. In other words, assets are not just split down the middle. In most cases, assets have a fixed value, and once the equitable share percentage between spouses is determined, the division of assets through collaboration and perhaps mediation is a fairly straightforward process. When the couple shares a business, however, equitable division becomes a bit more tricky because the business likely does not have a fixed value. One common business structure, an LLC or limited liability company, protects its owners from personal liability for the company’s debts. This type of business structure is often used in small- to medium-sized family businesses.

Proper valuation of a shared LLC is an essential element of a sound divorce settlement, and it requires the careful guidance of an experienced divorce attorney like those on our team at The Montanari Law Group. Contact us today at 973-233-439 or by completing our online contact form if you are navigating a divorce that involves a shared business, and read on to learn more about how having an LLC affects New Jersey divorce.

Explore Your LLC Options in the Event of a Divorce in NJ

There are multiple options for spouses who share a limited liability company and are getting divorced. The couple may decide to sell the company and equitably split the profits or for one to buy out the other’s stake in the company. The couple may determine a way to divide the company into separate organizations, with each spouse heading one section of the business. Or, if the couple is amicably separating, they may decide to continue running the business together.

Steps to Handle Your LLC After a Divorce

What makes having a skilled divorce attorney on your side a priceless element of any divorce involving a shared LLC is their capacity to help you properly valuate the corporation. Because value isn’t a fixed number, they will call on experts such as forensic accountants and financial analysts intimately familiar with your field to determine the full value of the LLC. Then, your attorney will help you work with your spouse to decide the best steps forward regarding your stakes in the company, either selling it off completely, negotiating a buyout, or continuing to maintain co-ownership of the business.

Ways to Evaluate the Value of an LLC

The income method and market value method of valuation are the two primary methods of evaluating the value of an LLC. The income method determines value by examining the monthly income of the company for the past two to three years. The market value method appraises the company based on other similar companies in the field that have recently sold.

Is My LLC Classified as a Marital or Non-Marital Asset?

All assets acquired after the marriage are considered marital assets, with limited exceptions. As such, if you started your company before the marriage and ran it on your own, it will likely be considered a personal asset, not subject to New Jersey’s equitable distribution laws. If you started the company after marriage or had a joint share or role in the company, it will likely be considered a marital asset, subject to equitable distribution.

Consult our Divorce Lawyers for Help Protecting Your LLC in the Asset Division Process

When an LLC is part of a divorce settlement, the benefit and downright necessity of qualified legal counsel cannot be overstated. The purpose of New Jersey’s equitable distribution law is to ensure that you get a fair percentage of marital assets in the divorce, but until you have a clear and expertly-determined valuation of your marital assets as well as the specifics of your equitable right to them, you cannot hope to receive your fair share in a divorce. Our team at The Montanari Law Group handles a multitude of divorces involving family businesses, including LLCs.

We represent divorcees in West Orange, Wayne, Prospect Park, Ringwood, Montvale, Little Falls, and throughout Essex, Bergen, and Passaic County, helping them to determine whether it is in their best interests to sell their share of the company or buyout their spouse, sell the company as a whole and equitably distribute profits, or keep working together professionally after divorce. We also employ the services of the top business valuation and financial experts in New Jersey to help you determine the living value of your LLC. Contact us today at 973-233-439 to learn how we can protect your best interests in divorce.