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What happens to your family business when you divorce?

| Dec 23, 2019 | High-Asset Divorce |

If you and your spouse own a Florida business together, you both likely have major concerns about the “disposal” of that business during your impending divorce. Florida law requires you to divide all your marital assets and debts fairly and equitably between you when you divorce, which means that somehow you must divide your business that way, too. 

As reported in Forbes, you have three basic options: continued post-divorce joint ownership, sale of the business, and one spouse’s buyout of the other’s ownership interest. Each of these options presents you with positives and negatives. 

Continued joint ownership pros and cons 

In terms of the least amount of business upheaval, you may wish to consider continuing to jointly own your business after the divorce. This option only works, however, if both of you can separate your personal lives from your business lives and continue to work together despite the fact that you cannot continue to live together. 

Sale pros and cons 

Selling your business and dividing the proceeds will give both of you a substantial influx of cash that you can use as you wish. A sale, however, requires you to determine not only your business’s overall value, but also the amount of your respective ownership shares and a realistic selling price. You may well need to hire a professional business evaluator to ascertain these amounts. In addition, depending on the strength of your local real estate market, it may take months to finalize the sale. 

Buyout pros and cons 

If one of you has particular ties to the business and wishes to continue operating it, but the other would just as soon move on to new business challenges, the staying spouse will need to buy out the leaving spouse’s ownership share. If you and your spouse are a high-asset couple, the staying spouse may be able to give the leaving spouse sufficient nonbusiness assets to equal the amount of his or her business share. 

Again, however, this entails valuing the overall business and the amount of each spouse’s ownership interest. The staying spouse could also bring new cash into the business by acquiring a new partner or attracting venture capital, using it to buy out the leaving spouse. Still another option the staying spouse might consider is obtaining a business loan with which to buy out the leaving spouse. 

This is general educational information and not intended to provide legal advice.