How Are Business Assets Divided in Florida Divorces?

Dividing business assets during a divorce in Florida can be one of the most complex aspects of the process. Whether you or your spouse owns a business outright, co-owns a business, or simply has an interest in one, understanding how Florida law handles such assets is essential. In Florida, the equitable distribution of marital assets and liabilities, including business interests, is governed primarily by Florida Statutes Section 61.075. This article explains the key considerations and legal principles involved in dividing business assets during a Florida divorce.

What Are Marital and Nonmarital Assets?

The first step in dividing business assets is to determine whether the business interest is classified as a marital asset or a nonmarital asset. According to Florida Statutes Section 61.075(6), marital assets include those acquired during the marriage, while nonmarital assets are generally those acquired before the marriage or by inheritance, gift, or other exclusions.

If a business was started or acquired during the marriage, it is likely to be deemed a marital asset. However, if the business was established before the marriage, it may be considered a nonmarital asset unless marital funds or efforts contributed to its growth, as explained in Section 61.075(6)(a)(b).

How Is the Value of a Business Determined?

Valuing a business is a critical step in dividing business assets. Florida courts require a fair market value assessment, as stipulated in Section 61.075(6)(a)(f). This value represents the price a willing buyer would pay, and a willing seller would accept in a fair market transaction.

Key factors in determining the value of a business include:

Expert testimony from business appraisers or forensic accountants is often necessary to accurately determine value, particularly in cases involving complex financials.

Does Goodwill Factor into a Business Valuation?

Goodwill refers to the reputation and continued success of a business. Florida law distinguishes between enterprise goodwill and personal goodwill. Enterprise goodwill is linked to the business itself and is considered a marital asset. Personal goodwill, on the other hand, is tied to the personal reputation or skill of the owner and is treated as a nonmarital asset.

As stated in Section 61.075(6)(a)f(II), courts must determine whether goodwill is separable from the owner’s personal contributions to assess its classification properly.

What Role Does Spousal Contribution Play?

Florida Statutes Section 61.075(1)(g) highlights the significance of spousal contributions to the acquisition, enhancement, or appreciation of business assets. Contributions can include direct involvement in the business, such as managing operations, or indirect support, such as taking on household responsibilities to allow the other spouse to focus on the business.

The court considers these contributions when determining whether to classify the business as a marital asset and in deciding how to distribute its value equitably.

What Happens When a Business Is Co-Owned?

In cases where one or both spouses co-own the business with third parties, additional considerations arise. Courts aim to avoid disrupting the business or harming the interests of third-party stakeholders. This often means awarding one spouse the other’s interest in the business and offsetting the value with other marital assets.

Section 61.075(1)(f) emphasizes the desirability of keeping certain assets intact, including business interests, where possible. This provision allows courts to prioritize the stability and continuity of the business while ensuring fairness in asset distribution.

Can Interim Distributions Be Made?

Under Section 61.075(5), Florida courts may authorize interim partial distributions of business assets during the pendency of divorce proceedings. Such distributions must meet the “good cause” standard, which includes extraordinary circumstances, such as preventing financial loss or covering necessary expenses.

This provision ensures that business owners have access to sufficient resources to maintain operations or address pressing financial obligations while divorce proceedings are ongoing.

What About Business Debts?

Just as business assets are subject to equitable distribution, so are business debts. Section 61.075(6)(a) specifies that liabilities incurred during the marriage are marital liabilities. Courts consider whether the debt was incurred for the benefit of the business and the marriage when determining how to divide it.

In situations where a business debt is tied to one spouse’s misconduct, such as reckless financial decisions or unauthorized spending, courts may classify the debt as a nonmarital liability.

Sarasota, Bradenton, and Venice, Florida Business Asset Division Lawyer

Navigating the complexities of dividing business assets in a Florida divorce requires a comprehensive understanding of the applicable laws and thorough financial analysis. The equitable distribution process aims to balance fairness with practical considerations, ensuring both parties receive their rightful share while minimizing disruption to business operations.

If you’re facing a divorce involving business assets in Sarasota, Bradenton, Lakewood Ranch, or Venice, Florida, the experienced legal team at the Law Offices of Matthew Z. Martell, P.A. is here to help. Our skilled attorney understand the intricacies of Florida divorce and family law and can guide you through the process to protect your rights and interests. Contact Law Offices of Matthew Z. Martell, P.A. by calling (941) 556-7020 or contacting us online for a consultation.

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