Divorce brings with it a number of concerns all at once. What will the relationship be between you and your children? Will you be responsible for paying or have the right to receive alimony, and how much and for how long? For spouses who own businesses, and specifically those who co-own businesses with others in Florida, one burning question is what will happen to the business following the divorce?
How Florida Divides Property in a Divorce
A key first step in answering this question is understanding the difference between how the law treats marital and nonmarital assets in Florida.
A nonmarital asset is an asset you had before you were married, while a marital asset is an asset that you created, earned, or acquired during your marriage. Nonmarital assets are returned to the spouse who owned them following a divorce, while a marital asset is subject to equitable distribution between the spouses in a divorce. Equitable distribution means that each spouse should get a roughly equal portion of the total amount of marital assets, regardless of whose labor went into growing the asset.
If a business was started before the marriage, but has grown in value over the course of the marriage due to the efforts of at least one spouse, then the increase in value over the course of the marriage will be considered marital assets subject to equitable distribution, regardless of which spouse is listed as the owner of the business.
So How Does This Work in a Co-Owned Business?
That does not necessarily mean that your spouse will get half of your interest in your co-owned business, however. Florida’s rules on equitable distribution allow judges to incorporate a number of factors in determining how to apportion assets to each spouse, both in the total value of the assets as well as in assigning the specific assets to each spouse.
One such factor a judge can consider is, “The desirability of retaining any asset, including an interest in a business, corporation, or professional practice, intact and free from any claim or interference by the other party.” That said, this is only one of several factors a judge can consider, another of which is the efforts both spouses made to enhance the value of marital and nonmarital assets. Thus, a non-owning spouse might argue that he or she is entitled to some portion of the interest in a business owned by the other spouse due to contributions made to the business.
Oftentimes when dividing an asset, the judge will not actually split ownership between the spouses but will require a spouse retaining ownership to make a payment to the other spouse representing his or her ownership interest via the marriage. Thus one spouse may continue on as an owner while having to write a check to the other spouse.
In all cases, spouses are free to work together to negotiate ownership of a business following a divorce, and are encouraged to work with their attorneys to reach an agreement that reflects both their interests and the future well-being of the company.
Legal Counsel in Your Florida Annulment or Divorce
If you have any questions regarding divorce in Florida, The Law Offices of Ira M. Marcus, P.A. in Miami can help. Contact our office today to set up a consultation with a trusted and caring Florida family law attorney.