What Happens when a Divorcing Couple Owns a Business?
When a couple divorces, Florida law requires that all of their marital property is divided equitably between them. Some types of assets and property are easier to divide than others. For example, liquid assets in bank accounts may simply be split between the spouses. However, other marital property, such as the family home, furniture, or other possessions, cannot be so easily split up. One type of property that may be particularly difficult to divide is a business owned by both spouses.
When a married couple starts a business together, that business may very likely be the primary source of income for each spouse. Additionally, starting and building a business can be extremely personally meaningful, as well. For this reason, many divorcing couples have a difficult time agreeing on how to divide their business interests. The following are a few main options for dividing a business in divorce.
One spouse buys out the other’s interest—If spouses decide that only one of them will keep running the business alone, they will have to take several steps. First, they will have to determine the value of the business as a whole and the percentage of each spouse’s interest (if it is not 50/50). Next, the spouse keeping the business will have to compensate the other to take over their percentage of business interest. If the buying spouse does not have liquid assets to cover the entire buyout, the court may use other types of marital property or monthly payments to ensure fair compensation.
There may be complications in this type of division. For example, the spouse who is giving up their business interests may not have another immediate source of income and may have to start over in building a new business or seeking other employment. This may require time to acquire new training, skills, or education, and may result in a lapse in earning capability. A court may order the spouse retaining the business to provide financial support to the other until they are able to support themselves.
Sell the business to a third party—Once the value of the business is appraised, the spouses may decide to sell the business to a third party and neither will retain business interests. However, this solution may have its own challenges as finding an appropriate buyer may take some time. Additionally, both spouses may then have to find alternative sources of income.
Continue running the business together—This option is, of course, only viable for couples who are able to get along after their divorce. However, many amicable couples are able to treat a business almost like a child after a divorce and continue working together despite their marital differences. This allows both spouses to retain their source of income and not have to walk away from the business they worked so hard to build.
It is important for anyone considering a divorce to contact an experienced Tampa Bay divorce attorney at All Family Law Group, P.A. by calling 813-816-2232 for a consultation at no charge.
By Lynette Silon-Laguna Google+