SARASOTA, BRADENTON AND VENICE FLORIDA LAWYER OFFERING GUIDANCE ON BUSINESSES IN DIVORCE
The tricky business of determining whether a business is a marital asset
Divorce is a difficult process. If there is a business relationship between spouses, then it becomes more difficult. When it comes to a marital business, basically the divorce gets even more complicated. Under Florida law, a business is treated like an asset. The question is: whose asset? Inevitably, when business owners come to our Sarasota, Bradenton, and Venice, Florida divorce law firm, they want to know how their business will be viewed when it comes to equitable distribution of property.
The business is separate if:
- You owned it prior to the date of your marriage
- You inherited it
- You acquired the business with separate funds
The business is a marital asset if:
- The business was started or acquired during your marriage
- It was purchased with commingled funds
- You used marital funds to run or improve the business
- Your spouse contributed either financially or supplied labor in the operation of the business
- The business increased in value during the marriage
Furthermore, if the income derived from the business was used to support the marriage, the business may be characterized as a marital asset.
What is the value of the business?
Business valuation considers a number of factors including real estate, bank accounts, account receivables, machinery, equipment, inventory, and customer lists among other items. There are three different methodologies used here for arriving at the value of a business:
- Income approach: In the simplest terms, this method determines business value based on the earnings it generates now and what it is likely to generate in the future. A formula-based income approach is commonly used in the valuation of professional practices in a divorce.
- Market approach: This approach uses comparative data to determine value. By looking at the recent sales of comparable businesses, it is possible to determine the likely value of your business.
- Cost approach: This is a “fair market” method that assesses value based on the tangible and intangible assets and liabilities of a business.
Assuming that you and your spouse have already agreed upon how to divide marital property, including your business, in mediation, or alternatively if neither spouse is contesting the ownership or the value, then the Court will make an award. The business may be awarded to one party wholly or it may be divided between the parties.
Put your business in our hands
We have helped clients throughout Sarasota, Bradenton, and Venice, Florida deal with businesses in a divorce and we are here to provide you with the legal guidance you need. For more information and to schedule a free 30-minute consultation, please contact our office or call us at (941) 556-7020.