Some couples have more than a romantic relationship – they are also business partners. This adds a layer of complication when they decide to divorce.
What happens to the business? Do they have to sell it and split the proceeds, or can they continue to run it together?
Separate versus marital property
Approximately 10% of businesses in the United States are owned by spouses. In a state such as Florida, where marital property is divided equitably, it’s important to understand the difference between separate and marital property. This classification directly affects how courts will handle business assets during the divorce proceedings.
Separate property businesses were owned by one spouse before the marriage or acquired through an inheritance. Marital property businesses were created during the marriage using joint funds. Many combine elements. One spouse may have owned the company before the couple married. However, it may become partial marital property if the non-owning spouse made contributions through labor or financial investment, or marital funds were used for expansion.
Once ownership classification is determined, a professional business appraiser needs to do a valuation to determine fair market value. Once that is complete, the couple has several options:
- The business is sold, and the proceeds are divided according to the divorce decree.
- One spouse holds on to the business and buys the other’s share. This can be done with a lump-sum pay, installment payments or by giving up a greater portion of the other marital assets.
- The former couple decides to continue their business partnership with clearly defined roles and responsibilities. Sometimes, they discover they work better as business partners rather than romantic ones.
The combination of divorce and business ownership adds layers of complexity. A legal professional can protect your rights and help ensure you receive what is rightfully yours under Florida’s laws.