Protect Your Business Assets in Divorce: Here’s How
For most people, their biggest concern during divorce is their children. Business owners, however, have an additional concern to consider: their livelihood. If you own a business and are either in the midst of a divorce, are considering filing for a divorce, or have recently filed for divorce, there are precautions you need to take to prevent your business assets from being distributed to your spouse. You need to take these precautions regardless of when you formed your business—either before or after tying the knot. One such precaution is retaining a Fort Lauderdale property division lawyer right away.
When Your Business is a Marital Asset in Florida
Whether you formed your business before tying the knot or afterward does not matter to the Florida courts. Under Florida Statute 61.075, any nonmarital property that was enhanced in value over the course of the marriage thanks to the physical or monetary efforts of either party is considered a marital asset ((6)(a)1.b). Additionally, all income earned from nonmarital assets during the marriage and that was treated, used, or relied upon by both parties as a marital asset, is also considered a marital asset ((6)(b)3.).
For instance, if your spouse contributed to the growth and success of your business in any way—even if it meant that he or she stayed at home with the kids so that you could invest all of your time into growing your company—it is a marital asset. If your spouse worked overtime so that he or she could pay the bills while your business struggled, your business is considered a marital asset. If you and your spouse used the income from your business to pay the bills, save for retirement, pay for health insurance, or go on vacation, it is considered a marital asset.
How to Save Your Business Assets From Distribution
The most effective way for business owners to keep their business assets from being divided in a divorce is to draft a legally valid prenuptial agreement. Though not romantic, a prenuptial agreement can set financial expectations and responsibilities for each spouse. It can also help each spouse determine what part of the small business, if any, will be marital property and what percentage will remain separate.
Of course, if you are reading this, you are likely beyond the “agreement” phase. If you have yet to file for divorce, and if you and your spouse are still somewhat civil, consider forming an LLC or Corporation. Both an LLC and Corporation are separate entities, which means that any assets that the business owns are, well, the business’s.
However, keep in mind that any marital assets used to pay for the business’s expenses can either be subtracted from your overall settlement or used to determine whether or not the company is actual marital property. If you choose to go the entity-formation route, you need to be careful in how you do so, and that you do not overstep any legal boundaries.
Really, the best way to protect your business assets is to maintain a good working relationship with your ex. Though this is easier said than done, a divorce mediator can help the two of you communicate in a civil manner and come to an agreement that makes he or she happy and that preserves the financial integrity of your business. If mediation is not an option, a skilled divorce lawyer can negotiate on your behalf with the opposing counsel to ensure the best possible outcome.
Retain the Help of a Skilled Fort Lauderdale Divorce Lawyer
If you own a business and are about to embark on the divorce process, you need to retain the help of an experienced Fort Lauderdale property division lawyer. Your livelihood is at stake, and one wrong move may be the difference between saving your business and being forced to sell it or its assets for the sake of fair property division. Do not let your livelihood be affected by your love life. Contact the office of Edward J. Jennings, P.A., to discuss your options today.