Divorce can be complex, especially when it involves business ownership. Spouses need to understand how divorce can impact a business.
There are key considerations to be aware of as you go through the process.
Marital vs. non-marital assets
Florida follows equitable distribution, meaning the court divides marital assets fairly, though not necessarily equally. A business started during the marriage counts as a marital asset. If one spouse owned the business before the marriage, it might be non-marital.
However, if the business appreciated in value or the non-owner spouse contributed to it during the marriage, some or all of it might become marital property.
Valuation of the business
Determining the business’s value often requires a professional business appraiser. The appraiser considers the business’s income, assets, debts and market conditions. Accurate valuation ensures fair distribution of assets.
Division of business interests
After valuation, the court decides how to divide the business interest. There are several options:
- Buyout: One spouse buys the other’s share of the business. This method allows the business to continue operating without disruption.
- Co-ownership: Both spouses retain ownership and continue running the business together. This option works only if the spouses can maintain a professional relationship.
- Sale: Sell the business and divide the proceeds. This option is often used when neither spouse wants to continue the business.
knowing these options in advance can help you make better decisions.
Protecting the business
Business owners can take steps to protect their business in case of divorce. Prenuptial or postnuptial agreements can specify how the business will be handled. Additionally, keeping detailed financial records and maintaining a clear separation between personal and business finances can help.
Legal guidance
When working through a divorce involving business ownership, attorneys who understand family law and business can help ensure a fair and equitable resolution. They can also provide strategies to protect the business and minimize disruption.
Understanding these aspects can help spouses make informed decisions about their business during a divorce. Proper planning can help protect the business interests and achieve a fair outcome.