How To Protect My Florida Business During Divorce
The old adage about half of marriages ending in divorce is true, according to statistics from the U.S. Census Bureau – but only for first marriages, as second and third marriages end at an even higher rate, and do so faster. When a divorce is happening, the spouses generally divide their assets equitably (fairly), but this can include your business if it is held to constitute marital property. The idea of losing the business you worked so hard to build can be a nightmare for many – but it may be possible to contact a knowledgeable business law attorney before proceedings begin and try to protect what is yours.
Is It Marital Property?
Perhaps the most important issue in these situations is whether or not your company qualifies as a marital asset. Florida observes the equitable distribution system of property division upon divorce, which means that unlike other states where assets are divided 50-50, a Florida court will distribute marital assets in the fairest way possible. However, it can sometimes be difficult to determine whether your business – or part of it – qualifies as marital property. In general, if one (or more) of three situations apply, the business will be marital property:
- If you started your business after your marriage, it will be presumed that you used marital assets to do it;
- If your business is a sole proprietorship, it is an extension of you rather than a legally separate entity, which qualifies it as a marital asset; or
- If your business grew during the marriage, the part of the business which expanded during that period may qualify as marital property, while the rest may not.
It is possible – though extremely difficult – to keep a business separate from one’s marital property. A business owner must take extreme care to not use a penny of commingled money to further their business goals, and their profits must not contribute to their household overall. This is all but impossible as a sole proprietor – but it may be easier if you restructure your enterprise into a different entity.
Can I Protect My Company?
If you are in a position where divorce has not yet occurred, you and your spouse may be able to execute a pre- or post-nuptial agreement guaranteeing ownership of the business in the event a divorce does happen. That said, if you are about to go through a divorce, you may have to contend with the possibility that your business will be sold and the proceeds divided, in order to ensure you and your spouse receive equitable amounts of assets.
The most important thing that you can do if you fear your business being sold during divorce is to have it properly assessed by a business valuator beforehand. With a professional business assessment, you will have an idea of its overall value, and you may be able to negotiate with your spouse to either buy them out of the percentage of marital property, or agree to give them other assets, such as the marital home, if you get to retain the business.
Call A Seminole, FL Business Law Attorney
Divorce is, unfortunately, always a tangible possibility in this day and age. If you fear losing your business in an eventual marital split, you may be able to structure it in such a way as to preserve your options. A Florida business law attorney from the Hunt Law Group can try to handle the business side of your divorce, to ensure that your assets are appropriately protected. Call our office at (727) 471-0444 to schedule a consultation.