Couples and families in Florida and elsewhere do not look the same; thus, when a divorce occurs, how this process is handled and the decisions that result can be significantly diverse from one divorce to another. Not only does the dynamics of the family and the roles of each partner play a role in the divorce process, but the property and assets contained in a marriage also designates how the divorce process with unfold.
Protecting your business assets in a divorce
The best way to protect one’s property during the divorce process is to gain a better understanding how certain assets are handled in the process. Take business assets for example. In some cases, both spouses may not be actively involved in a business; however, the income and assets of the business are treated likely marital property. Thus, this calls into question on whether the business should be split like other marital property during dissolution.
Is a business marital property?
The answer to this question is dependent of various factors. Typically, a business is considered marital property; however, certain factors are used to establish this. For example, if one spouse owned the business prior to their marriage, this will be viewed as separate property. If a prenuptial or postnuptial agreement is entered into, the business could be claimed as a separate property in the document. Additionally, if the business is set up in a trust, this could help protect the business from becoming marital property.
However, it is important to note that simply having the business prior to marriage does not prevent it from becoming marital property. It can lose the status of being separate property if the other spouse becomes a partner of the business or is a significant part of the business, contributing to its growth. Moreover, if the business is established during a marriage, it will be deemed marital property.
Dividing a business during a divorce
If a business is deemed marital property during a divorce, there are three common ways to divide the business assets. The first way is to sell the business and divide the cash fairly between them. The second is the buy-out method. This means that one spouse is buying the other spouse’s ownership of the business, typically in one lump sum. The final method is to continue co-ownership of the business. This requires no division of the assets; however, it does require that ex-spouses to work together to continue the business after the dissolution of their marriage. This is not always feasible, especially in a high-conflict divorce.
No matter how a couple handles their assets during a divorce, it is important that they understand their rights, so they can effectively move through the property division process.
