Dividing a Business due to Divorce in Boca Raton, FL
Divorce can be stressful and time consuming but it gets even more complicated when a business is involved. If you own a business and you and your spouse are filing for divorce, your spouse could be entitled to a portion of your business whether or not he/she is a part owner. Businesses are a large investment, both financially and timewise, so it is important to protect your business to avoid any potential loss due to your divorce. It is also crucial to ensure that if your business is distributed amongst you and your spouse, that the distribution of assets is fair and equal to the role you and your spouse had in the company. If you are filing for divorce and have a business on the line, the Law Offices of Theodore Enfield, P.A., can help. We can provide you with a divorce attorney Boca Raton residents trust to ensure the protection of their company and the fair distribution of their assets.
Marital & Non-Marital Property
When it comes to divorce, your business is an asset that in many ways is dealt with the same way as an account, automobiles or any other assets would. However, before your business is divided amongst you and your spouse, it must be determined if the asset is marital or non-marital (separate) property. Assets that are acquired during the marriage are considered marital property, with certain exceptions, and are considered part of the marital estate. Marital property in a business is divided between the spouses in a divorce. Non-marital property are those assets acquired or inherited prior to marriage and belong only to the acquiring spouse. During divorce, non-marital property is awarded to the acquiring spouse rather than divided between both. Non-marital property, however, can become marital property in certain circumstances. If income from the business is combined with marital property than the business itself can be considered marital property during divorce. The same can happen if both spouses contributed to the increase in value of the business.
Valuation & Distribution of Business Property
Once your business has been classified either as marital or non-marital property, it is then valued for fair distribution. The valuation process can be lengthy and complex, a certified public accountant, or other expert in this area, will typically be brought in. During the valuation process both tangible and intangible aspects of the business will be assigned a value. Through financial records such as income tax returns, balance sheets, profit and loss statements, and checking account records, the current and possible future market value of the business is determined through its assets and debts.
After the assets are valued, they’re equitably divided amongst the spouses; there are several ways that this can be done. The most common is that the all or most of the business is awarded to one spouse and other assets are assigned to the other spouse to offset it. This is typical if one spouse has very little involvement with running the company. If both spouses had equal involvement, the court may determine joint ownership to continue as long as it will not harm the company. Under limited situations, the court may even order the business to be sold.
How to Protect Your Business During Divorce
When it comes to your business and divorce, there are various things that you can do to prevent or try to avoid any losses.
- Sign a prenuptial or postnuptial agreement: A prenup and even a postnup can be very helpful in designating your business as separate property.
- Keep family and business finances separate:By keeping detailed records and not using money from the family account for your business, you will avoid any non-marital property turning into marital property.
- Place the business in a trust: With a trust, you will no longer personally own the company, which will help separate it from a marital asset.
- Forfeit other assets: During the valuation of your business, you can try to retain complete ownership of the company by sacrificing other assets such as retirement accounts, the house, etc.
Boca Raton Divorce Lawyer for Your Business
When your business is on the line, it is crucial to have legal counsel every step of the way. This will help ensure that assets are distributed evenly or that you retain most of your business so that it doesn’t suffer significantly. Contact the Law Offices of Theodore Enfield, P.A., today for a Boca Raton divorce attorney who can help protect your business’s future.