You’ve worked hard to get your business where it is today. If you’re in the middle of a divorce, it’s natural to be anxious about what the divorce will mean for your business. Regardless of whether your spouse was involved in daily business operations, they still may be entitled to part of the business value. Below, we discuss some things you’ll want to consider when getting divorced and owning a business.
Marital Property and Asset Division
How much the divorce will impact your business will depend on whether your business will be assessed as a marital asset. All marital property is subject to equitable distribution during a divorce in Florida. Marital property is any asset you and your spouse gained, purchased, or acquired during the marriage. If you created or acquired your business when you were married, it would be considered marital property in most cases. Your ex-spouse would be entitled to part of its value. There are a few circumstances where a business may not be deemed marital property, such as putting this stipulation in a premarital agreement.
Valuing Your Business
Once your business is determined to be marital property, your business will need to be valued. The value of your business will be assessed considering the value of your assets, liabilities, and current market value. If you own an LLC or corporation with several business partners, your membership agreement should state how business owners would be affected if a partner gets divorced. The salary you take from the business will be used in various financial documentation to determine potential child or spousal support payments.
How a Business is Divided in a Florida Divorce
Once the business has been established as marital property and valued, the next task is to determine how the business will be split between you and your ex-spouse. Here are the three most common methods for dividing a business in a divorce:
Buyout
You can elect to buy out your spouse’s interest in the business as long as you have the funds to cover the value they hold in it. You may need to distribute other assets differently to have enough value to buy your spouse’s share in the business. The benefit of a buyout is that you will continue to own and operate the business as you did before the divorce. This type of division works well when only one spouse is involved in the daily business operations.
Co-Own
If you owned the business with your spouse, you may attempt to continue co-owning the company after the divorce. However, owning a business with your ex involves other potential conflicts and issues. This is generally not advisable and should be a last resort in rare circumstances. The benefit of this type of division is that the business structure and foundation remain intact.
Sell
The last business division option is to sell the business. If you own your business with other partners, you could sell your portion to them to keep the business in operation as it currently stands. You and your ex-spouse would then split the proceeds of selling your stake in the business. This is beneficial if you no longer wish to be involved in the business.
Divorced and Own a Business? Let Conti Moore Law Divorce Lawyers, PLLC Help
Business owners face unique challenges when getting divorced. At Conti Moore Law Divorce Lawyers, PLLC, we’re dedicated to helping you through the complex issues and details of your divorce, ensuring you and your business are protected. Call our office for a free 15-minute consultation. You can also speak with us directly using our live chat feature to schedule an appointment. For more resources about family law and divorce, view our blog.