New Jersey Family Law

MORRIS COUNTY DIVORCE ATTORNEY

What happens to an entrepreneur's business upon a New Jersey divorce? It's an important question, given that small business is the primary engine of economic growth in America. Very small businesses (with fewer than 20 employees) are responsible for half of the country's nonfarm real gross domestic product and "have generated 60% to 80% of the net new jobs over the past decade." For the entrepreneur of a small company without a prenuptial agreement eliminating the entity from contention, the business is just another asset in the marital estate subject to distribution. Regardless of whether it's an S corporation, a limited liability corporation, limited partnership or even a sole proprietorship, you have the right to have the entity valued and divided, typically in the form of a lump sum payout to the uninvolved spouse, when you and your partner part. Forbes Magazine, December 13, 2006

NEW JERSEY DIVORCE : BUSINESS VALUATION

A frequent issue in New Jersey divorce cases is the valuation of a closely held business. Here, the Court deals with the buyout of an interest in a LLC [Limited Liability Company]. Plaintiff asserts he is entitled to a figure determined by his expert accountant pursuant to the Operating Agreement, while defendants contend plaintiff's interest is subject to a rate swap, yielding a lower valuation. They also allege he acted in bad faith in setting up a competing company. Because the parties agree on the minimum amount due, the Court enters judgment for that amount. As to the balance, the court denies summary judgment, concluding additional discovery is necessary. Gerber, Jr. v. Gerber, et al., New Jersey Ch. Div., June 2, 2006

NEW JERSEY DIVORCE MEDIATOR : DIVIDING THE BUSINESS

This was the second appellate trip for this New Jersey divorce couple. This time, rather than remanding again, the Appellate Division exercises its original jurisdiction and rectifies the division of a 9.81% equity interest in a closely-held corporation. The Court addresses the correct amount to be distributed to each party, including whether a minority discount should have been applied in the equitable distribution valuation process.    Thalmann v. Thalmann, Jr., New Jersey App. Div., May 16, 2006

Double Dip?

In a 4-3 opinion, the highest court in New Jersey has found it is not impermissible "double counting" to use actual income of a closely held corporation for alimony purposes and then a lower, "normalized" income when valuing that same corporation for equitable distribution. The interplay between an alimony award and equitable distribution is subject to an overarching concept of fairness. Steneken v. Steneken, New Jersey Supreme Court, Justice Long dissenting, ___N.J.___(2005); 2005 WL 1159427, May 19, 2005.

Show Me The Money

What does a New Jersey divorce lawyer do when confronted with a cash business? Here, the Court refused to impute income to the husband, with the wife claiming that he had deliberately dissolved his lucrative cash pizza supply business to become a salaried employee of a distributor to avoid his obligations for both alimony and child support. The Court found that any alleged inconsistencies and financial machinations were taken into account by the trial judge. Neither party could maintain the level of the prior marital lifestyle any longer. The  remaining assets were divided equally, with the value of the cash pizza business being zero and with most of the cash having been dissipated. Weir v. Weir, New Jersey App. Div. March 10, 2005

What's It Worth?

One of the most challenging tasks for a New Jersey divorce lawyer is determining the fair market value of a closely-held business. In this case, the Court dealt with a real estate development partnership and its value at the time of its dissolution, including the appropriate criteria under the present and former Partnership Acts and the possibility that it may have had a negative value as of the valuation date. Sebring Assocs., etc., et al. v. Coyle, ___N.J. Super.___ (App. Div. 2005); February 28, 2005

Losing It All

This case shows that New Jersey courts can be gender neutral in applying New Jersey divorce law. The wife lost and the husband won just about every issue. These included imputing income to the wife, an attorney in private practice; awarding alimony to the husband, also an attorney; awarding him 50% of her law practice as equitable distribution; including the children’s expenses in determining the husband’s needs; requiring her to pay child support and all of the 4 children’s private school expenses; ordering her to pay a portion of his counsel fees; and granting a "no fault" divorce, not one based on extreme cruelty. Licata v. Licata, New Jersey App. Div. February 8, 2005

New Jersey Divorce : Professional Practice Valuation

Reasonable litigants and their experts can and often do differ on the fair market value of the assets subject to equitable distribution. More unusual, however, is disagreement over when a particular asset is to valued. Here, there was a significant difference in the value of the husband's ophthalmology practice (a) as of the date of the marriage and (b)its decreased value at the time of the filing of the divorce complaint. The trial court found that the husband had stonewalled discovery and therefore estopped him from using the latter value. The Appellate Division affirmed these rulings. Cooper v. Cooper, New Jersey App. Div., December 8, 2004.

New Jersey Divorce : Equitable Distribution

Does "equitable distribution" mean "equal distribution"? Sometimes yes, sometimes no. When it comes to the division of professional practices---especially those solely built by one spouse without the active assistance of the other spouse---New Jersey courts typically do not award half of this business asset to the non-titled spouse. In this case, the trial court awarded the wife a 40% interest in her husband's medical  practice. This discretionary decision was then affirmed on appeal. Garrett v. Garrett, New Jersey Appellate Division, December 8, 2004,