Florida Divorce: Property & Asset Division for a Family Business

Married couples that have a family business rarely anticipate what will happen to that business should they divorce. The sweat and hard work put into a family business can cause separating couples to fight over who gets the business in the divorce. Family businesses, like all businesses, can be considered assets, and if they are determined to be part of the marital estate, they can also be subject to division upon divorce. It takes careful planning to ensure that marital assets, like family businesses, are distributed fairly and equitably. As a result, if you are considering divorce and either you or your spouse owns or operates a family business, it is recommended that you secure the assistance of experienced legal counsel near you such as divorce attorney Matthew Z. Martell.

The experienced divorce lawyer at the Law Offices Of Matthew Z. Martell, P.A. understand how divorce can affect a family business and is trained to ensure that you receive the most favorable outcome in your divorce. We will listen to your concerns and craft a strategy that is client-focused and detail-oriented. To schedule a free initial phone consultation, reach out to us today by calling (941) 556-7020 or by contacting us online.

Property And Asset Division

When it comes to property and asset division in a divorce, Florida is considered an equitable distribution state. What this means is that when a married couple decides to divorce, the value of the entire marital estate is subject to division. All assets and property acquired by the spouses during the marriage can be considered part of the marital estate, and the court will look at a number of factors to determine the most equitable way to divvy it up if spouses can’t reach an agreement outside of a litigation scenario. Some of those factors include:

• The length of the marriage
• The income and earning capacity of the spouses
• The contributions to the marriage of each spouse
• The education level of each spouse
• The health of the spouses
• The age of the spouses

It is important to understand that equitable does not necessarily always mean 50/50. In some cases, a portion of the marital estate will be awarded to one spouse that is greater than what the other spouse will receive. The law says that an equitable division is one that is fair based on the factors listed above. Each marriage is different, and the unique circumstances of each couple will play a role in how the court decides what is fair and equitable.

However, it should be noted that generally speaking, property and assets that the spouses owned before they got married will not be considered a part of the marital estate and cannot be divided at divorce. Nor will gifts and inheritances, under most circumstances. There are exceptions to that rule, and it is recommended that you speak with an experienced divorce attorney near you like Sarasota, Bradenton, and Venice, Florida Matthew Z. Martell, Esq., about which property and assets may be split up when strategizing how to approach your divorce.

Family Businesses And Divorce

In most cases, family businesses are considered assets. All property and assets obtained during the marriage may be subject to division upon divorce, including family businesses. Unlike the marital home or other property where the value can easily be determined, family businesses can be complex, and figuring out how much they are worth can be difficult. But before the valuation process begins, there must first be a determination on whether the business is separate or marital property. If the family business was formed during the marriage, then it likely will be considered marital property and subject to distribution. If it was formed prior to the marriage and kept separate from the other spouse during the marriage, then it may be considered separate property and ineligible to be divided at divorce.

Still, it is important to recognize that a family business that existed prior to the marriage may be considered marital property if the funds from the business were comingled with marital funds or if one spouse quits their job during the marriage to work at the family business. Whether a family business is considered marital property will be decided by the court if no agreement can be reached by the spouses.

Family businesses can present a challenge because they are often run by spouses together. They may also involve other extended family from both sides. Similarly, family businesses where both spouses are involved tend to mix marital and business funds in their bank accounts. Because of this, the court may have a difficult time determining how to divide the business in a way that is fair to both parties. In some rare cases, spouses agree to continue to jointly own and run the family business even after they divorce.

Valuing A Family Business

If the court decides that the family business is marital property, then the next step is figuring out how much the business is worth. This process is known as valuation. Business valuation can be complex, and in many cases, business valuation professionals are hired to analyze the business and its records to determine its value. There are a few different business valuation methods, and the type of business will have an impact on which valuation method is used. Some of the more common business valuating methods are:

• Market approach: This approach compares data from other similar businesses to determine value. By examining the recent sales of comparable businesses, it is possible to calculate the likely value of a family business.
  Cost approach: Also known as the “fair market” method, this approach determines value based on the liabilities and the tangible and intangible assets of a business.
• Income approach: This approach calculates business value based on the current earnings and what the business is predicted to earn in the future. A formula-based income approach is routinely employed in the valuation of professional practices like a doctor’s office or a law firm.

Additional Considerations

Property and assets can be excluded from the marital estate and, as a result, are unable to be divided upon divorce if there is a valid pre-nuptial agreement. The state of Florida recognizes pre-nuptial agreements only if certain conditions are met. One of the key requirements for a valid pre-nuptial agreement is that there is a full and complete financial disclosure prior to entering into the agreement. This means that neither spouse can hide assets or fail to disclose property to their spouse before the agreement is signed.

Additionally, the spouses cannot be coerced or under duress at the time of the agreement. In other words, in order for a pre-nuptial agreement to be valid in Florida, both spouses have to voluntarily enter into it and be fully aware of each other’s finances. If any of these requirements are not met, then the agreement may be deemed invalid and not honored by the court.

Sarasota, Bradenton, and Venice, Florida Divorce Attorneys Available To Assist You

Divorce can be a stressful and uncertain time. Worrying about what will happen to a family business after your divorce can make matters even worse. These issues are some of the reasons why many people reach out to an experienced divorce lawyer such as Attorney Matthew Martell to protect and secure their financial future post-marriage. The Sarasota, Bradenton, and Venice, Florida divorce lawyer at the Law Offices of Matthew Z. Martell, P.A. understands how important your family business interest is, and we’re here to help you ensure that you come out of your divorce well-positioned and financially secure. We will fight hard to see that you receive a fair and final settlement. To schedule a 15 minute free initial phone consultation, reach out to us by calling (941) 556-7020 or by contacting us online. We look forward to hearing from you.