Dividing assets and liabilities in a divorce can be complex, especially when a business is part of the equation. For many women in Florida, especially those who are the primary earners or co-owners of a business, the fear of losing what they’ve worked so hard to build is real and justified. At Florida Women’s Law Group, we specialize in helping women protect their financial futures. If you’re you are thinking about divorce and are unsure of what happens to a business during a divorce in Florida, here’s what you need to know.
Is the Business Considered Marital Property?
Florida is an equitable distribution state, which means marital assets are divided fairly, but not always equally. Whether a business is considered marital property depends on several factors:
- Was the business started before the marriage? If so, it may be considered separate property, but if the business grew significantly during the marriage or your spouse contributed to its success, a portion of its value might be subject to division.
- When was the business started? If the business was founded during marriage, it's likely considered marital property.
- Did both spouses contribute? Financial contributions, time, labor, or even emotional support can factor in whether a spouse has a claim to the business.
Valuing the Business
Once the court determines that all or part of the business is a marital asset, the next step is business valuation. This process often involves financial experts and can include a review of the business’s financial records, evaluation of assets and liabilities, forecasting future earnings, and goodwill and reputation considerations.
The goal is to determine the fair market value of the business so it can be divided equitably or offset with other assets.
Potential Outcomes
Depending on the circumstances, here are a few common scenarios:
- One Spouse Keeps the Business
Often, the spouse is more involved in the day-to-day operations will retain the business. In this case, they might “buy out” the other spouse’s interest using cash, a structured settlement, and other marital assets (e.g., home equity or retirement accounts).
- Both Spouses Co-Own Post-Divorce
In rare cases, former spouses continue to run the business together. This requires a high level of trust and communication, something not all divorcing couples can manage.
- Sell the Business and Split the Proceeds
If neither spouse wants to keep the business or if a buyout isn’t financially feasible, selling the business and dividing the proceeds may be the best option.
Protecting Your Business
There are ways to safeguard your business before divorce becomes a possibility, such as prenuptial or postnuptial agreements, or implementing a shareholder or partnership agreement - each of these options can define what happens in the event of divorce, and keep personal and business finances separate.
If divorce is already on the table, it’s critical to work with an experienced attorney who understands how to protect what’s yours.
At Florida Women’s Law Group, we empower women to take control of their lives, personally and financially. If you’re a business owner or the spouse of one, call us at 904-900-2419 or schedule a call here to take the first step toward securing the future you deserve.
