Divorce Considerations if You Own a Business in South Florida

Divorce creates upheaval in many facets of your life, especially if you own your own business. Whether you run a successful content creation business, a medical practice, or a multi-national corporation, your business is likely to become a sticking point in your divorce.

Nearly all businesses count as marital property. If you founded or purchased your business after your marriage, it will count as marital property. If you owned the business before you married, the business may still count as marital property if:

• Your spouse worked at the business
• Your spouse took care of the children so you could work at the business
• You invested any marital funds in the business
• You used your business to fund personal items (e.g. cars, cell phones, etc.)

If the business increased in value during your marriage, the increase in value generally will also count as marital property.

To determine how to handle the business, you will first need to determine its fair market value. Your attorney will likely recommend a forensic accountant who will meticulously review all the financial records, interview suppliers and customers, and estimate the business’ future revenue and profit potential. The forensic accountant will also determine the value of the personal goodwill and the liquidation value of the business. Personal goodwill is how much the value of the business is based on the owner’s personality or reputation. Personal goodwill is not considered a marital asset. The accountant will also analyze the sales of similar businesses that have recently sold.

Once you know the value of the business and the value of the personal goodwill, you can determine how to divide it between you and your spouse. Some options include:

• One spouse buying out the other. In some cases, the spouse who sells their share of the business may be required to sign a noncompete agreement.
• Selling the business and dividing the profits
• Jointly owning and running the business (this option can be difficult to successfully manage day-to-day post-divorce)

It can be emotionally devastating to lose control of a business that you founded and ran successfully. To help cultivate the best possible outcome, following are some tips for success:

• Maintain a cordial relationship with your spouse. The friendlier the terms you are on, the more likely they will be to negotiate in good faith.
• Avoid taking vengeful actions, such as doing something that could harm the business or its reputation. This is nearly guaranteed to backfire.
• Discuss with your attorney how the division of the business impacts alimony payments, timesharing, and the division of other assets.
• Planning for the future of the business through mediation tends to result in better outcomes than litigating a trial and having the judge decide the future of your business.

Divorcing your spouse when you own a business is an extremely complex endeavor that has a significant impact on your financial future. If you are a business owner, contact Troy Legal for expert advice during your divorce.

Troy Legal, P.A. was founded in 2009 and serves clients throughout South Florida. Troy Legal, P.A., specializes in Marital and Family Law, providing reputable legal services for prenuptial and co-habitation agreements, paternity cases, adoption matters, alimony and child support, time sharing and parenting plans, drafting of qualified domestic relations orders (qdros), mediation services, equitable distributions, collaborative law, post-judgement modification and enforcement, domestic violence cases, and dissolution of marriage or divorce.  Troy Legal, P.A. is dedicated to serving clients through compassionate and aggressive representation, while upholding the highest degree of ethical standards.