Although divorce may be the only solution for a marriage, in many cases, divorce is a stressful process for everyone who has to take part. It can take an emotional and financial toll and lead to hurt feelings and lots of resentment. What may complicate the divorce process even more is if one or both partners are business owners. In this article, we will discuss the complications involved with owning a small business while going through a divorce.
Issues To Consider
There are a few legal issues that a person needs to consider while getting a divorce in Florida that may impact their business. Those issues are as follows:
- Florida Equitable Distribution Law
- Valuing The Business
- Comingling Of Funds
- Not Seeking Or Informing Legal Counsel Of Business Interests
Florida Equitable Distribution Law
Florida Statute 61.075 is where the state codified Florida Equitable Distribution Law. The Florida Equitable Distribution Law assumes that both partners in a marriage equally own all marital assets. As a result, it assumes the court should divide those assets equally. In some situations, a business owned by one or both partners to a marriage may be a marital asset under Florida’s Equitable Distribution Law. The most common reasons why the court might consider a business a marital asset is if one spouse can show one of the following:
- The owner formed the business after the marriage, therefore creating an assumption that they utilized marital assets to start the business.
- The owner created the business as a sole proprietorship. This makes the company and the owner legally an extension of each other.
- If the business grew during the marriage, there is an assumption that this was made possible by spousal support.
Valuing The Business
It is important to know the true value of your business before getting a divorce. If Florida’s Equitable Distribution Law is going to be applied to the business, it will be important for both parties to know the valuation of the business as it will impact the distribution of other assets in the divorce proceedings.
Comingling Of Funds
It is common practice, especially in sole proprietorships, to use personal funds for the business and vice versa. Although the practice is common, this may have legal ramifications in divorce proceedings. Therefore, it is important that a business owner properly audits the accounts and records to determine what funds, if any, are either owed to the marriage or the business.
Speaking To Legal Counsel
Even if there has been a prenuptial or postnuptial agreement signed concerning the business, many issues can make those agreements null and void. Failure to seek legal counsel or to disclose business interests to legal counsel during a divorce proceeding can have negative implications on the outcome of the divorce.
When you hire the lawyers at Thompson Law, we will discuss and go over all your financial interests, including any businesses you own. We will work to make sure that those interests remain protected during and after the divorce proceeding. If you are seeking a divorce or receive divorce papers, contact Thompson Law for a consultation.