Deciding to file for divorce when you and your spouse own a business together can be a scary thought to process. You may be left wondering if the divorce will imply losing your business shares or closing of your business altogether.
As you slowly go through your divorce proceedings, you must gain a clear understanding of the complexities involved in business division and how to best work your way around it.
How is joint business divided in Florida?
Florida is an equitable distribution state. Under this divorce law, all marital property owned by the couple is divided equitably, but not equally. This means that if you or your spouse established a business during your marriage, the court will generally view it as a marital asset.
However, if one spouse owned the business before marriage and the financial aspects were kept fully separate from the other spouse, the court will view this as a non-marital asset. In this situation, the owner of the business will stay the same.
Are there exceptions?
Commingling can turn a non-marital asset into a marital asset. This could happen if your spouse helped manage your business during your time as a married couple. For example, your spouse agreed to contribute financially to help improve it. This mixes your business and personal assets, and your spouse may have a claim on a portion of your business.
How can I ensure a fair division of our business?
To divide a business equitably, you will likely need to work with financial experts to appraise the value of the business. After this process is complete, the court will establish how much the asset is worth.
Depending on the type of business, the appraisers may include Certified Public Accountants (CPAs), tax professionals, business valuation analysts and real estate appraisers. By seeking help from experts, couples can divide the business fairly based on its real market value.
What happens after the business appraisal?
There are three business division methods that the divorcing couple can choose from after the appraisal period. These are:
- Buyout: In a buyout, one spouse purchases the business shares of the other and becomes the sole owner of the property.
- Co-ownership: In co-ownership, both ex-spouses keep the property and continue to run the business together as co-owners.
- Sale of business: In a sale of business, both ex-spouses sell the property and divide the profits equally.
There is light at the end of a tunnel
Divorcing your spouse does not necessarily mean you have to lose your family-owned business too. By learning about the process and seeking help from financial professionals, you can protect your rights and handle your division of assets with composure and confidence.
