Protecting a Florida Business from Divorce
Limiting financial risk during divorce when you own a business
As Florida is an equitable distribution state, divorcing spouses keep their separate property, but must divide their marital estate in a manner that is fair, if not necessarily equal. If you own a business, either individually or jointly with your spouse, this process can be complex, so you should only trust your case to an experienced high net-worth divorce attorney. At Rafool, PLLC in Miami, we have extensive experience in such matters and have developed proven strategies for protecting a Florida business from divorce. Whether you want to keep your business or obtain the equitable stake you think you deserve, our legal team can assemble the evidence necessary to make a strong legal argument.
Can a spouse get a business in divorce?
Each case depends on its particular circumstances, but a good first step toward answering this question is determining which of these descriptions suits your case:
- One spouse owns the business as separate property — If one spouse owned the business prior to marriage and maintained it separately from their spouse, the business is not part of the marital estate and remains with the spouse who owns it.
- The couple owns the business jointly — Here, the couple either started the business together or at some point made an agreement to be co-owners. The business is a marital asset, so it is subject to the rules of equitable distribution.
- One spouse claims to own the business, but the other says no — One spouse might be the legal owner of a business, but their spouse could claim an equitable stake because it was acquired during the marriage, the non-owner spouse worked there without compensation or marital funds were used to keep the operation going. In these situations, the business is likely subject to equitable distribution. The proportionate contributions of the spouses might be considered.
Given the many potential ties between personal and professional interests, many cases fall into the third category.
How to divorce-proof a Florida business
There are steps you can take to protect your business interests in a divorce. These include:
- Clear title — Execute papers that name you as the exclusive owner.
- Avoid using marital funds — If you must use joint funds, execute a loan agreement and have the business repay your marital estate.
- Pay fair compensation — If your spouse participates in the business, pay the market rate for those services.
- Execute a marital agreement — Execute either a prenuptial or postnuptial agreement that recognizes the business as separate property.
A Miami prenuptial agreement attorney at our firm can help you protect your interests.
How are business assets divided in divorce?
Businesses placed in the marital estate is treated as any other asset. Courts must decide what percentage of the business each spouse deserves. The question then becomes, “Can the couple continue to co-own the business after divorce?” Common ways of resolving this dilemma include:
- One spouse buying out the other
- The business being sold, and proceeds divided
- A spouse majority owner operating the business with the other maintaining their minority stake
One possible solution might be for one spouse to buy out all or part of their spouse’s business take and compensating them with other assets from the marital estate, such as the couple’s home.
How to value a business in divorce
There are many methods of business valuation that take relevant factors into consideration, including:
- Tangible assets, such as real estate and intellectual property
- Intangible assets, such as branding and customer goodwill
- Liabilities, including debt and contractual obligations
Parties often present competing valuations from financial experts. We can retain an expert to support your side.
Contact a knowledgeable Florida divorce lawyer
Rafool, PLLC in Miami counsels clients on how divorce might affect their business and advocates for their interests. To schedule a consultation, please call 305-567-9400 or contact us online.