3 Ways to Divide Marital Business in a Florida Divorce
If you and your spouse co-own or operate a business together, dividing what could be your most valuable asset can be a complicated, time-consuming, and costly experience during a divorce in Florida. When a marital business is involved in a divorce, the divorcing couples must not only properly evaluate the business but also agree on the most appropriate way to distribute it.
It is advised to seek help from a knowledgeable property division attorney in Orlando if your divorce involves a marital business that must be divided between you and your spouse.
Valuing a Marital Business During a Divorce
It is necessary to evaluate your marital business properly in order to ensure fair division between the divorcing spouses. For this purpose, the divorcing couple who co-own or operate a business together must hire a business valuation specialist or a forensic certified public accountant (CPA).
When valuing your marital assets, experts usually use the market-based approach or calculate liquidation value. After determining how much your marital business is worth, you and your spouse will have to negotiate the division of your business.
How to Divide a Marital Business in a Divorce
There are three most popular ways to divide a marital business in a divorce.
Buying Out the other Spouse’s Interest
Buying out the other spouse’s interest is the most common way to divide a marital business during a divorce. As its name implies, a buy-out occurs when one spouse buys the other spouse’s interest in the marital business.
However, buying out your spouse’s interest only makes sense if you have enough funds to buy your spouse’s share. In most cases, the buying spouse transfers the agreed-upon lump sum to their spouse to buy out their interest. Alternatively, they may agree to structure the buy-out as a regular loan.
If one spouse cannot afford to buy out their spouse’s interest, they could opt for co-ownership. Instead of splitting the business, the divorced couples will continue to jointly own and run the business together following their divorce.
However, co-ownership is less common than buying out because not all divorced couples get along well after the divorce. The inability to maintain a healthy working relationship can take a toll on the business.
Note: Couples who seek a collaborative divorce are more likely to continue operating a business after their divorce ends than those who have many disputed issues and seek a contested divorce.
Selling the Business
Finally, the third option is to sell the marital business and divide the proceeds. The process is not very different from selling a marital home to split the proceeds. However, not everyone wants to sell their business, especially if they have worked hard to make it profitable.
Selling a marital business is not always the most viable option if the business is not profitable, and it would take a long time to find a buyer or when one of the spouses wants to continue operating the business following the divorce. Also, a divorcing couple may not be able to sell the marital business if they disagree over the value of their business.
If you are getting divorced and you co-own a marital business, or operate a business together with your spouse, consult with an experienced Orlando divorce attorney. Contact Greater Orlando Family Law to discuss your options and get a consultation. Call at 407-377-6399 to choose the most suitable way to divide a marital business in your particular case.