During a divorce, distributing marital assets may be a difficult and time-consuming procedure. Many married couples nowadays hold a closely held business, which might be one of the most significant assets in their marriage. When a family-owned business is involved in a divorce, it adds a particular set of complications to the divorce proceedings.
If you and your spouse own or manage a business together, splitting what may be your most valuable asset during a Florida divorce can be a hard, time-consuming, and costly process. When a marital business is involved in a divorce, the divorcing spouse must not only carefully appraise the business but also agree on how it should be distributed.
If your divorce concerns a marital business that must be shared between you and your spouse, it is recommended that you obtain legal advice from The Law Office of John Vernon Moore, P.A. in Florida.
Before dividing the business, it is important to know its value. In a divorce, there are various alternative ways for valuing a business, as follows:
- Approach based on income
- Asset-based approach
- An approach centered on the market
The income-based approach values a business by looking at its historical and present earnings, as well as expected future earnings. The asset-based approach determines the worth of a business based on its assets minus any liabilities.
The market-based approach compares a business’s value to that of other similar enterprises sold in a free market system to assess its worth. A business valuation specialist will look at previous sales of firms that are comparable to yours. When a firm is relatively distinctive and there are no similar sales, problems occur.
Division of a Business
During a divorce, Florida law stipulates an equitable distribution of marital assets. To put it another way, marital assets should be distributed 50/50. Stocks, bonds, real estate, and any other item acquired during the marriage – even a business – are all included. A business is a valuable asset that should be handled in a divorce settlement or judgment.
Business interests, especially if you formed the business together, might be considered marital property. This means you’ll have to figure out how to split your interests equitably given every one of your other marital assets.
The following are the three most common ways that couples divide a business they own.
- One spouse purchases out the other — Couples might decide that one of them will operate the business while the other pursues a new opportunity. In this case, one spouse will have to purchase the business interests of the other. They can accomplish this with cash or other forms of compensation. If the spouse does not have the financial means to purchase the other half of the business, they can figure out another arrangement. For instance, one spouse may receive the business in exchange for the home or other valuable property, while the other spouse receives the home or other valuable property.
- You maintain operating the business together — in a divorce, one owner does not have to give up their portion of the business. If your divorce is peaceful and friendly, you may decide that working together after your divorce is doable. If there is no marital discord, some individuals may even be able to work better together.
- You sell the business and split the money — divorcing business owners may opt to sell the entire business at market price and then divide the money fairly. If either partner wishes, they can then utilize the money to establish their own business.
Can I sell my business before divorce?
Yes, anything you do before a divorce that isn’t deemed “marital waste” is entirely OK. If you sell the business, however, the proceeds would very certainly be considered marital property, and your spouse will be entitled to half of the selling proceeds.
Contact our Florida Divorce Attorney
Divorce may be a tough process to begin. It is one of the most stressful things a person can go through. It is critical to have a guide who can assist you in identifying your rights and duties, which you may neglect if you attempt to do it on your own. You’ll need an attorney at The Law Office of John Vernon Moore, P.A. that specializes solely in family law and divorce because you’ll need someone who knows all there is to know about divorce.