LAW
Protecting Your New Jersey Business from Divorce
Compiled by John Joseph Parker Contributing Editor
As Jerry Seinfeld says in his standup comedy routine , “ marriage is the leading cause of divorce .” And divorce can spell trouble for a business without proper measures in place . Law firms can help clients in and out of relationships who want to protect sweat equity and financial growth from distribution after the love is gone and when the marriage is over . COMMERCE asked the experts what to expect from the process and how to protect a business from divorce .
Brach Eichler LLC By Carl J . Soranno , Esq ., Member
It is vital for a business owner to understand what is distributed in a divorce , how a business is valued and how it affects support obligations . Sole proprietorships can be problematic in a divorce , while a limited liability company can have an operating agreement , and a corporation can address marriage or divorces in a shareholders ’ agreement . Provisions can protect the ownership interest from distribution to a spouse and can contain buy-sell agreements that define a buy-out procedure and a valuation mechanism . Agreements can also conceal
38 COMMERCE www . commercemagnj . com
a company ’ s books and records as confidential and protected . For one of the firm ’ s clients , we modified the shareholder ’ s agreement to provide for the cost of discovery and specified that discovery be paid by the shareholder getting a divorce . We have drafted premarital agreements that address the ownership of a business establishing it as separate property and dealing with the growth of the interest during the marriage . We have also drafted limitations on a spouse ’ s inspection rights and their access to operating agreements of LLCs . In many cases , we have also used estate planning and particularly trusts to shield business assets in the event of marriage and divorce . These issues should be drafted in a premarital agreement , or the business ’ s formation and operating documents . Once drafted , review periodically , and modify following changes in the law .
Chiesa Shahinian & Giantomasi PC By Susan Reach Winters , Esq ., Chair , Family Law Group
As a business owner , a divorce can easily become a lawsuit nightmare and an ongoing financial strain beyond what you could ever imagine with a business partner , a client or a supplier as an adversary . In most states , the value of a business started during a marriage is considered a
Law firms can help clients who want to protect sweat equity and financial growth from distribution after the love is gone and when the marriage is over .
Photo : Getty Images / iStockphoto / izzetugutmen marital asset subject to being shared with your spouse in a divorce . Even if the business was started prior to the marriage , the increase in its value may also be subject to division — notwithstanding whether your spouse actually assisted you in its operations . The concept of “ double dipping ,” where your business will be counted once in the context of equitable distribution and a second time with the income from that business again being considered in the context of alimony , is another complication more specific to New Jersey . To help protect their businesses from both factors , a strategy we often advise our business owner clients — while not foolproof — is to have a prenuptial agreement that protects the business in the event of a divorce . An even better case scenario would be to layer the agreement with a trust , which should each contain specific language to ensure that the business is not accessible to your spouse . A consultation with both a family law and trust and estate attorney in this regard can help minimize the risk that your spouse will wind up as your business ’ s most significant creditor .
NPZ Law Group , P . C . By David H . Nachman , Esq ., U . S . Managing Attorney
NPZ Law Group works with many individuals who are currently in the United States on employment-based visas or pursuing employment-based green card applications . We have seen that many times , these visas or green cards can be used as weapons in divorce . When an individual receives an employment-based visa or green card , their dependent spouse will also receive the same . Therefore , when there are arguments between spouses , many times the principal applicant may threaten to divorce their spouse , and this may leave the dependent spouse without any legal status in the United States . This also has a significant impact on the dependent spouse ’ s employer because once their legal status is revoked pursuant to divorce , they are no longer eligible to work in their field . Many dependent spouses are renowned within their fields and any disruption to their career could be catastrophic . It is therefore extremely important for employers who hire these dependents to look at opportunities to file separate visas for these individuals to prevent them from abruptly losing a valuable employee . Our office has worked with many employers and individuals to obtain visas in these situations .