Starting a business takes hard work, sacrifice and dedication. For many Florida business owners, the thought of losing everything they have worked for when they divorce can be terrifying. Thankfully, divorce doesn’t have to mean the end of your business. Understanding how business assets get divided can help you prepare and protect what you’ve worked so hard to build.
Is my business “marital property”?
In Florida, equitable division laws categorize assets as either “marital” or “separate” property.
- Marital property typically includes anything either spouse acquires during the marriage, which can encompass businesses you started or grew during that time. This holds true even if only one spouse’s name appears on the business documents.
- Separate property includes assets and debts you owned before marriage or inherited, which can include your business. Be cautious, though; if you mix separate property with marital assets, it might become marital property.
It is crucial to note that these are general rules, and specific circumstances will affect your outcomes. The timing, funding sources and business management all affect how courts view your company during divorce.
How much is the business worth?
Before dividing a business, you need to know what it’s worth. This requires a professional business valuation. Think of valuation like figuring out what someone would pay to buy your business today. Several methods exist, but most consider:
- Your business assets and equipment
- Current and projected income
- Market conditions in your industry
- Customer base and goodwill
- Business debts and liabilities
A forensic accountant or certified business appraiser typically handles this process. These professional assessments aren’t cheap—they can cost thousands of dollars—but they provide crucial evidence for fair division.
Dividing the business
Once valued, there are several options for dividing business interests in a divorce:
- One spouse buys out the other by paying cash, giving up other assets or making payments over time. This keeps the business intact under one owner.
- You sell the business, and both spouses split the proceeds based on ownership percentage.
- Both spouses continue as co-owners after divorce, though this can be highly complicated if there is ongoing tension.
The best approach depends on your specific situation, including whether you can afford a buyout and if working together remains possible.
Understanding these basics helps you prepare for what’s ahead. While divorce creates uncertainty, knowing how Florida handles business assets lets you make informed decisions to protect what you’ve built.