I am a business owner, and my marriage is on the rocks. I think we’re heading towards a divorce. But I’m worried about my business because businesses often get split up in a divorce. How exactly does that work?
Hi, I’m Sergio Cabanas Attorney-at-Law here in Florida. And today we’ll be talking about how businesses are divided in the event of a divorce.
So, step 1 is having to determine whether the business itself is considered marital, subject to a division between two spouses, or non-marital, in which one of the spouses retains the business.
How do we determine that?
Well, it depends on the specific circumstances of your case.
Was the business started before the marriage operated and sold off prior to the marriage, or was the business started during the marriage and operated and gained value during the marriage?
Or is it somewhere in between?
It was started before the marriage, but continued to operate during the marriage which makes a portion of that business subject to a marital interest, as opposed to a portion not subject to a marital interest. Etc.
So, we get to step number 2, which is to determine the value of the business.
This could be done in several different ways from an accounting standpoint.
And that’s why it’s a good idea to use a forensic accountant to assist you with that.
Step number 3 is the actual process of dividing the business.
This could be done in several ways.
You can choose to buy out your spouse’s marital interest in the business.
The parties can also choose to remain as co-owners of the business, but really more as business partners, to continue to conduct the business as they’ve done in the past.
Lastly, you can choose to sell off the business and divide the proceeds in a way that’s agreeable to both parties.
So, now you can see how this issue can be quite complicated and that’s why it’s a good idea to have experienced attorneys and tax experts to advise you through this process. Especially when we’re dealing with high-net-worth businesses.
I hope this short video provided you with some general guidance over this very complicated and difficult but important topic.
Thank you again for watching.
And as always, stay informed so you can stay strong.