Divorce for Business Owners
Property division is complicated in any divorce but becomes even more complex when a business is involved.
When going through a divorce, most spouses do not want the courts to divide their property, even though it is inevitable. When a business is part of property division proceedings, it can become even more frustrating for spouses, and the future of the business is sometimes called into question. So, what happens to a business in a Florida divorce?
Separate Property vs. Marital Property
In Florida, the courts will consider only marital property during property division. Marital property includes any assets the couple acquired together, or that one spouse acquired during the marriage. Separate property includes any assets both spouses brought into the marriage with them.
Businesses are usually considered marital property, even if the spouse that owns the business owned it prior to the marriage. This is because the courts will assume that a portion of the business’ profits were used to support the family, unless the owner can prove otherwise. Once it is determined that the business is marital property, the business is then valued to determine how to divide it.
Valuing a Business During a Divorce
To determine how to divide a business during a divorce, the value of the business must first be determined. Most courts will order that a CPA or professional appraiser values the business. There are many factors taken into consideration when valuing a business. These include the value of the physical property, equipment, raw materials, and finished products. Other assets such as customer lists and accounts receivables are also taken into consideration.
Dividing a Business During Divorce
Many business owners worry that during a divorce, their spouse will automatically receive half of their business. This is not usually true, unless both spouses were equal partners in the business and shared equally in the operations of the business. In most cases, the spouse that started the business, and owned and operated it, will be able to keep the business even after the divorce is finalized.
However, Florida is an equitable distribution state. This means that a judge will divide property depending on what is fair, but not necessarily equally. When dividing a business, a judge is likely to award the actual business to the spouse that owns it. Due to the fact that a business is considered marital property though, the spouse that keeps the business will need to relinquish other assets so that the division is considered fair.
For example, when one spouse is awarded a business during divorce proceedings, a judge may order them to pay more in spousal maintenance or give up other assets. In many cases, a judge may divide the value of the business equally but order the owner of the business to buy out the other spouse.
Are You a Business Owner Going Through a Divorce? Our Florida Family Lawyer can Help
It is a scary prospect to consider that you may lose the business you started from the ground up during your divorce. At The Law Offices of Robert Stepniak, our Daytona Beach family lawyer can help ensure that your business is protected from property division and will advise on the many options you have. Call our attorney today at (386) 202-1814 to schedule a consultation.
Contact us and discuss your legal options now.