Protecting Your Professional Practice In A Divorce
Most times when a professional business is established, one of a handful of business entities is chosen for the purposes of operations and the best flexibility. This ranges from sole proprietorships to corporations. However, the last thing most business owners think of at the time is the impact of a divorce.
Business Entity Form Makes a Difference
The fact is divorce proceedings directly impact personal assets and property in Sarasota, Bradenton, and Venice, Florida. That includes directly owned businesses. As a result, any direct business ownership becomes subject to the separation and ownership of that company’s title and operations, which, of course, can be potentially disruptive to running that business smoothly. However, where the business has been established as an independent entity, such as a corporation, then the ownership depends on who has the most shares in the company versus other shareholders. Sometimes this ends up being the same as the direct title and sometimes not. It depends on how many other shareholders are involved in the corporation.
A critical step forward is to keep running the business as-is during the divorce proceedings. Most Sarasota divorce lawyers agree on this point. Until the court gives a specific order, nothing has happened to the business per se in terms of its ownership. Where there is direct ownership or shareholder ownership, those financial records do need to be disclosed directly unless specifically required under Florida mandatory disclosure rules. Otherwise, if the business is an independent entity, business records in general must be subpoenaed and justified to the court as related to the divorce. The discovery process handles this aspect of a divorce case.
The valuation of a profession depends on the industry it operates in. Typically, an independent business appraisal is used and provided as evidence to the court for the purposes of distribution. Certain business valuation methods are available, ranging from book value to liquidation value to an income valuation.
Court Inclinations Matter
Many times, a court is unwilling to just arbitrarily split a business between spouses. In fact, many courts tend to favor professional practice divorce resolutions that preserve the business, providing a stream of income to the outside spouse in lieu of ownership value with respect to what would have been her/his personal share of the business.
As a Sarasota, Bradenton, and Venice, Florida family law resource, the Law Offices of Matthew Z. Martell, P.A., can help guide your professional business through the divorce process by focusing on preservation and stability. Call us at (941) 556-7020 to schedule a 15 minute Free Initial Phone Consultation appointment today to discuss this matter further.