How Business Ownership Affects Divorce Settlements in Florida

Introduction

When one or both spouses own a business, dividing assets during a divorce can become more complex. Business ownership raises unique challenges related to valuation, income determination, and asset distribution. In Florida, businesses may be considered marital property, subject to equitable distribution, even if only one spouse actively runs the company.

This guide explains how business ownership affects divorce settlements in Florida, how businesses are valued, and what options are available for dividing business interests fairly.

Is a Business Considered Marital Property in a Florida Divorce?

Whether a business is classified as marital or non-marital property depends on several factors, including when the business was established and how it was managed during the marriage.

• If the business was started during the marriage, it is typically considered marital property and subject to division.
• If the business was founded before the marriage, it may be considered separate property. However, any increase in its value during the marriage may be subject to division if both spouses contributed to its growth.
• If one spouse helped manage or contributed financially to the business, even if they were not a legal owner, they may have a claim to a share of the business assets.

Because Florida follows equitable distribution laws, business assets are divided fairly but not necessarily equally.

How Business Valuation Works in a Divorce

Before a business can be divided, it must be accurately valued. There are several methods used to determine a business’s worth in a divorce case:

Asset-Based Valuation

This approach calculates the total value of a business’s assets, including real estate, equipment, and inventory, while subtracting liabilities. It is often used for businesses with significant tangible assets.

Income-Based Valuation

This method evaluates the business’s profitability by analyzing financial records, cash flow, and projected earnings. It is commonly used for professional practices and service-based businesses.

Market-Based Valuation

This approach compares the business to similar companies that have recently been sold to determine its fair market value.

Hiring a financial expert or forensic accountant is often necessary to ensure an accurate valuation, especially when one spouse believes the other may be hiding assets or undervaluing the business.

Options for Dividing a Business in a Divorce

Once the business’s value is determined, divorcing spouses must decide how to divide ownership and financial interests. Common options include:

One Spouse Buys Out the Other

If one spouse wants to retain full ownership, they may buy out the other spouse’s interest using personal funds, a structured settlement, or other marital assets.

Selling the Business and Splitting the Proceeds

If neither spouse wants to keep the business, selling it and dividing the proceeds may be the best option. This ensures both parties receive financial compensation without ongoing business entanglements.

Continuing Joint Ownership

Some divorcing spouses choose to continue running the business together, especially if they have a strong professional relationship. However, this option requires clear agreements about each party’s roles and responsibilities.

Offsetting Business Interests with Other Assets

In some cases, a spouse may receive a larger share of other marital assets, such as real estate or retirement accounts, in exchange for giving up their interest in the business.

Challenges in Dividing a Business During Divorce

Dividing a business in a Florida divorce presents several unique challenges, including:

• Determining the true financial value of the business, especially if one spouse controls the finances.
• Addressing hidden assets if a spouse attempts to underreport income or overstate expenses.
• Managing the tax implications of transferring business assets or selling the company.
• Ensuring that a buyout agreement or settlement does not disrupt business operations.

Because of these challenges, having legal and financial professionals involved in the process is crucial.

Protecting a Business from Divorce

Business owners can take proactive steps to protect their business from being divided in a divorce, including:

• Creating a prenuptial or postnuptial agreement that specifies how the business will be handled in the event of a divorce.
• Maintaining separate business and personal finances to reduce the likelihood of the business being considered marital property.
• Establishing a shareholder or partnership agreement that outlines buyout provisions if a divorce occurs.
• Using a trust or business entity to hold ownership interests in a way that limits their exposure in divorce proceedings.

These steps can help prevent lengthy disputes and ensure business continuity.

What to Do If You Own a Business and Are Facing Divorce

If you or your spouse owns a business and you are considering divorce, taking the following steps can help protect your interests:

1. Gather financial records including tax returns, profit and loss statements, and business bank account records.
2. Hire a forensic accountant to ensure accurate valuation and identify any hidden assets.
3. Consult with a family law attorney to explore the best options for dividing business assets.
4. Consider negotiating a settlement rather than going to court to avoid disruptions to the business.

How a Family Law Attorney Can Help

A family law attorney can:

• Assist in determining whether the business is marital or separate property.
• Work with financial experts to ensure accurate valuation.
• Negotiate a fair settlement that protects business interests while ensuring equitable distribution.
• Draft agreements that allow for business continuity while resolving ownership disputes.

At Bonderud Law, we help business owners and spouses navigate complex asset division issues in divorce. If you are facing a divorce and have concerns about how your business will be impacted, contact us today for a free consultation.

Conclusion

Dividing a business in a Florida divorce requires careful evaluation, negotiation, and legal planning. Whether one spouse buys out the other, the business is sold, or joint ownership continues, ensuring a fair outcome depends on accurate valuation and strategic decision-making.

If you are going through a divorce and own a business, working with an experienced family law attorney can help protect your financial interests and ensure that the settlement is fair and sustainable.