If you are a business owner and are getting a divorce in the state of Florida, it is likely you are wondering what will happen to your business. The answer, as in most areas of the law, is, “it depends.” In an ideal world, you and your spouse drew up a prenuptial agreement prior to marriage. Also ideally, the business would be identified as non-marital property (and you complied with Florida laws about the non-marital property during the course of the marriage to ensure it remained legally non-marital property). Alternatively, (also an ideal situation), you and your spouse addressed the division of the business specifically in your prenuptial agreement. However, in many cases, the ideal situation is not reflected in reality.
Understanding Florida Divorce Laws
In Florida, the property is divided “equitably” in a divorce. This does not necessarily mean everything is divided “equally.” While it may or may not be easy to divide a business in half, no one thinks it would be a good idea to divide the couch in half. Thus, an equitable division of assets may include one spouse getting half of all the furniture and the other spouse getting the balance of the furniture. Alternatively, one spouse may retain most of the furnishings while the other spouse receives a larger portion of the cash on hand to account for the furniture, making the division equitable if not exactly equal.
It is possible you may be able to keep your business in exchange for giving your soon-to-be ex-spouse a greater portion of the stock portfolio, the vacation home, or some other asset (frequently the family home) to make property division equitable.
Negotiating Your Divorce
While a court of law will make equitable property determinations after litigation in a divorce case, it doesn’t have to be that way. Most divorces are resolved without the need for litigation. Your divorce lawyer will discuss the case with your spouse’s divorce lawyer, discussing possible scenarios for property division to come up with a resolution both sides can live with.
Obtaining a Business Valuation
It is a good idea to get a business valuation. This ensures both parties have an understanding of the value of the business. There are a few different ways a business can be valued, including the following:
- Income method;
- Market method; and
- Asset method.
The income method examines a business’s earnings, both current earnings, and future potential earnings. In the market method, the business is compared to similar businesses that have recently been sold to determine market value. This method is not unlike evaluating “comps” in real estate. Finally, the asset method values the business by determining assets and subtracting the liabilities of the business to come up with a value.
An experienced divorce attorney will have connections with professional business evaluators. These evaluators can fairly and accurately determine the value of your business. This information provides the starting point. Once known, the value of the business assists in determining how other assets might be divided to achieve an equitable distribution of property.
There are circumstances, of course, where the property can be divided inequitably. However, these circumstances are limited in nature. In order to determine whether an inequitable division of property is appropriate in any case, one must consult with a qualified family law attorney.
If You Have a Business
If you have a business and are considering marriage, you should contact a qualified family law attorney to assist you in drawing up a prenuptial agreement to address your business ownership. Alternatively, if you have a business and are considering a divorce, you should contact a qualified family law attorney to protect your business interests.
Attorney Eric C. Cheshire has nearly 30 years of experience handling family law cases. Let him put his experience to work for you. Contact the office at (561) 677-8090 to discuss your case today.