Divorce is often difficult and complicated. When one or both of you owns a business, your divorce can become far more tangled and complex. Here’s an overview of choices you have for your business when you file for divorce.
Your spouse may be eligible for a significant portion of the business in a divorce. Most people do not wish to remain business partners after a divorce, which can put the business at risk unless you enlist the help of an experienced divorce lawyer.
Your lawyer will help you differentiate between marital assets and non-marital assets. Non-marital assets include gifts, inheritances, personal injury damages, and property owned prior to marriage. However, any of those can become marital assets if they are mixed in with marital assets, such as in a joint checking account.
Marital assets are income and property that were acquired by either spouse during the marriage. This usually includes businesses, business accounts, and business income.
Florida is an equitable distribution state, which does not automatically divide assets down the middle. The courts will divide marital assets by percentages based on several different factors, such as the marriage’s length and each spouse’s involvement in and income from the business. Your attorney will be able to advise you on your unique situation.
What You Can Expect for Your Business
Since your business will probably be considered a marital asset, the business will have to be valued according to specific rules to determine how much it’s worth. If you have other business partners, your spouse will be entitled to a percentage of your business share.
If your business had an operating, partnership, or shareholder agreement, provisions should already be in place in case divorce occurs. This may require the approval of all other partners or shareholders before selling or dividing the company. Your attorney can look over your agreement and explain the options available to you and your partners.
You have several options available for your business in a divorce:
- If you want to keep your business without your spouse’s involvement, you may pay for your spouse’s portion with your share of other marital assets, such as stocks or retirement funds.
- You can create a long-term payout with interest to your spouse for the amount you owe them for their share of the business. Your attorney can draft this agreement for you.
- You may also sell your business and divide the proceeds. This may be the only way you can afford to pay your spouse’s share.
- Or continue working with your spouse in the business, but form strong boundaries around emotions and work. Remember that your working relationship doesn’t need to last forever; you may need to make changes in the future.
Because situations like this are often complex, it’s essential to consult with an experienced divorce lawyer when your divorce is imminent. They will advise you on the best possible route for your unique experience by lending insight based on years of working with other clients.
Even if you are experiencing an amicable split from your spouse, it’s important to have divorce lawyer who understands how to help clients who own businesses, so your assets are protected for the long term.