Many married couples depend on the family business to provide income and stability during the marriage. But what happens to the business if the couple gets divorced? The answer depends on several factors, including whether the business is considered marital property and the value of the business.
Is the business marital property?
Generally, as an equitable distribution state, Florida divorce courts will divide all marital property “fairly and equitably” between the divorcing spouses. The first step in this process is determining which assets are considered marital property. Courts will likely classify a business as marital property if the business was formed or acquired during the marriage or if marital funds were used towards the business.
What is the value of the business?
Once the court classifies a business as marital property, it will need to determine the value of the business. Divorcing spouses may hire a business valuation expert, such as a forensic CPA, to determine the value of the business using one of the following:
- Asset based approach: Determining value of assets if business was sold.
- Market based approach: Determining value based on other similar businesses for sale.
- Income based approach: Determining value based on current and future net income.
A Florida business owner involved in a high asset divorce may worry about what will happen to the business they built if they get a divorce. Fortunately, there are many qualified attorneys available to review your case and ensure that your rights are protected during the divorce process.