Unlike traditional marital assets, businesses are trickier to divide.
In Florida, marital assets are divided based on equitable distribution, a standard that prioritizes a fair distribution rather than a 50/50 split. Many Florida couples either own a business together or have a spouse who started and owns a business.
Whether the business in question is a single-person business or a thriving enterprise, determining whether a business is a marital asset is often one of the trickiest parts of Florida divorce. Then, even if the business is determined to be a marital asset, properly measuring, valuing and dividing the business can be even more difficult.
Here are a few tips that can be used as a helpful starting point toward understanding how businesses are measured, valued and divided in Florida divorce.
Is the Business a Marital Asset?
The most important determination to make regarding a business in divorce is whether the business is a marital asset in the first place. After all, if the business is separate property rather than marital property, the business will not be divided in the divorce.
Assets acquired during the marriage and with joint funds are, with few exceptions, determined to be marital property. Businesses are no exception to this general rule. However, if a spouse started/acquired a business prior to the marriage or used separate funds to acquire it during the marriage, the business will be separate, non-marital property. As such, the other spouse would generally have no legal interest in the business.
This is not the end of the analysis, however. A business that would otherwise be separate, non-marital property can become marital property if a spouse transfers an interest in the business to the other spouse.
For the sake of the rest of this article, let's assume that the business in question is indeed marital property. Once a business is established as marital property, the business must then be valued in order for it to be equitably distributed.
Business Valuation in Divorce
In a Florida divorce, the value of the business will be the fair market value at the date of separation. This valuation is fairly easy to make for bank accounts or even a family home, which can be done with an appraisal or by both parties agreeing to use the home's tax value. Business interests, however, are far more complex.
Imagine the business in question is a brick and mortar electronics store, complete with cash registers, A/V equipment, accounts receivable and profit margins. Placing a specific dollar amount on a spouse's equitable interest in the business would be quite difficult. For this reason, it is often the case that spouses will come up with vastly different valuation figures.
Note that even if a business is determined to be non-marital property, it will likely still be valued. This is because Florida courts will still want to determine the value of each spouse's non-marital property in order to make a fair and equitable distribution of marital property. To navigate the complexities of business valuation in divorce, it is in your best interests to receive the trusted legal counsel of a Florida family lawyer.
If you have questions regarding marital assets, or are unaware as to the terms and conditions in, talk to, and retain, a family law attorney who can help. Contact Damien McKinney of The McKinney Law Group to discuss your case further. He can be reached by phone at 813-428-3400 or by e-mail at email@example.com