Marital Business and Divorce

Dividing a Family Business in a Divorce

In a Florida divorce, one of the largest concerns can be what happens to the family business. The simple answer is that any business that was established during the marriage is marital in nature, and is therefore subject to equitable distribution.

As often as not, businesses are owned by a spouse, and one or more other people that have no relation to the marriage. Another common scenario is when the business was owned prior to the marriage by one spouse, but was expanded during the marriage. Initially, we're going to keep it simple and assume that the business in question was started during the marriage, and owned by one, or both of the spouses. We'll cover what happens with partial ownership after that.

According to Florida law, a marital business  is a marital asset, and therefore presumed to be owned equally by the spouses. This means that the Courts presume that the business should be distributed between the spouses equally. Obviously, there is no simple way to "divide" a business, so the Courts have to take some creative actions to acheive an equitable result.

Typically one spouse is more active in running the business than the other, so  forcing the spouses to be equal co-owners would simply force two people who already want to get away from each other to try and run a business together. Also, requiring a marital business to be broken up and sold may eliminate the parties' source of income, so how do Sarasota and Bradenton Divorce Courts handle this problem?

Generally, the your divorce attorney can convince the Court to preserve the integrity of the business under one spouse (usually the spouse that has historically run the business). This means that, for example, if the Husband has been the one to run the family business for the past ten years, the Court recognizes the value in maintaining the business, and allowing the Husband to continue running it at a profit.

What is the Business Worth?

What the Court will often do is determine the value of the business, either through the testimony of the parties, or more preferably, the testimony of one or more professional business valuators. Once that value is determined, and assuming there are no grounds for unequal distribution of the business, the Court will Order a distribution schedule where the Husband will be required to make lump sum payment(s) to the Wife equal to half the value of the business.

So what if the business was owned prior to the marriage? When this is the case, the business may be considered all, or partially non-marital. This means that the Wife (or Husband depending on the circumstances) would only be eligible to recieve a portion of the value of the business. This theory is also applied to when one spouse co-owns a business with other, non related parties. The Court can only distribute the portion of the business that is owned by the spouse(s). It is rare that a Court will Order the destruction of a viable business via the divorce, so the most important thing is to ensure a favorable valuation of the business depending on your position.

How to Protect Your Business in a Divorce

Our Sarasota and Bradenton Divorce attorneys can assist you in planning your business in relation to a pending divorce, or advise you of the likely outcome if your spouse makes a claim against the family business in your divorce. Alternatively, if your spouse has a business that has increased in value during the marriage, or was founded during the marriage, you may be able to make a significant claim.

If you have questions, or if you find your business threatened by pending litigation, call and talk to one of our Sarasota family law attorneys.