Dividing Businesses In Divorce

Fort Lauderdale Lawyer Helping People Divide Businesses in Divorce Actions

Many married couples not only build their lives together but develop and grow businesses together as well. If they decide to end their marriage, then they must determine their business ownership rights as well. It is not uncommon for people tasked with dividing businesses in divorce to disagree as to whether the business is owned jointly or separately or dispute the value of each party’s contribution to the business, however. As such, if you or your spouse are a business owner and you are contemplating divorce, it is critical to consult an attorney to discuss your rights and obligations. Susan Brown of the law firm of Susan R. Brown, PA, is an assertive Ft. Lauderdale divorce attorney who understands the importance of protecting assets in dissolution proceedings, and if you hire her, she will fight to help you seek the results you deserve.

Determining the Nature and Value of Businesses In Divorce

In Florida, any property or assets acquired during marriage, including businesses, are generally considered marital property, with a few exceptions. Exceptions include premarital and post- marital agreements that provide otherwise and a business being inherited by or gifted to one party from a third party.

Excluding the type of exceptions addressed above, if one spouse started a business during the marriage, it’s likely to be considered marital property.

Even if the business is initially classified as separate if either the owner or non-owner spouse’s efforts result in an increase in value and or if marital funds are contributed to or invested in a party’s premarital, a portion of the business may still be considered marital property.

Valuation of professional practices and personal services business excludes any value of the owner spouses personal goodwill The exclusion of personal goodwill from the value of a business for divorce purposes values the business based on the assumptions that the owner will not be signing a non-compete agreement and that he or she could open a competing business “down the street” and take all of his or her customers to the new competing business. The exclusion of personal goodwill generally results in professional practices and personal service businesses being valued based on the tangible assets and receivables as of the date of filing minus liabilities. The type of businesses where income and the anticipated return of customers is considered in its value are the types of businesses where the owner’s continued presence doesn’t impact the value. Examples of businesses where personal goodwill doesn’t affect the value include convenience stores, fast food franchises, and other franchise businesses where customers choose the business for reasons other than their relationship with the owner.

Excluding the type of exceptions addressed above if one spouse started a business during the marriage, it is likely to be considered marital property. Even if the business is initially classified as separate property if either the owner or non-owner spouse’s efforts contribute to its growth. or marital funds were invested or used to support it, or are retained in the business, a portion of a premarital business may still be considered marital property.

In most cases where the value of a business is in dispute, it’s crucial for both parties to obtain an accurate assessment of the business’s value. In businesses where the owner’s goodwill is not applicable, enterprise goodwill may impact the value of the business. In the leading case of Held v Held the court described nonpersonal “enterprise goodwill as   “property of an intangible nature commonly defined as the expectation of continued public patronage. Examples of this are customers returning to their local Starbucks because of its location or customers buying gas and convenience stores because the business is located near their home.

Valuation of businesses that don’t have a personal goodwill component is typically valued based on comparable sales and sometimes earnings.

Determining the fair market value of a business often requires the assistance of a forensic accountant or an appraiser depending on the nature of the business. Appraisers are often used to determine the value of business real estate, Sometimes business brokers are used to determine the value of a business that does not include a personal goodwill component. Like real estate appraisers, business brokers rely on comparable sales. involve involves Forensic accountants and other experts assess the business’s value by examining its financial records and tax returns. There are several approaches to valuation, including asset-based, income-based, and market-based methods depending on the nature of the business. Where businesses have enterprise goodwill, the experts may consider projected future revenue. cases involving unique businesses, using the market-based approach can be challenging.

Dividing Businesses in Divorce

In Florida divorces, all marital property is subject to equitable distribution. It is important to note that equitable does not necessarily mean equal but means that the court will divide any marital asset in a manner it deems fair and just.

In cases involving businesses that are considered marital property, this means that the court aims to divide the value of the business fairly between the spouses, taking into account various factors. Typically, the division of a business involves one of several outcomes. In many cases, will award the business entirely the owner spouse of while offsetting the value with other marital assets given to the other spouse. If the spouses both work in the business and the value of the business is based on the personal goodwill of both, the sale of the business or division of the client may be required unless the parties mutually agree to remain partners after divorce. There are scenarios where a couple are great business partners even though they are not great partners in the relationship.

In the typical case where the owner will be retaining his or her business and buying out the other spouse’s share of the marital value, the court may order a distribution where the non-owner spouse is awarded offsetting marital assets. The court can also require the purchasing spouse to buy out the other spouse by requiring a lump sum payment or a structured settlement over time. The decision on how to divide the business ultimately depends on the specific circumstances of the case and what the court deems fair and equitable for both parties involved.

Meet with a Trusted Fort Lauderdale Divorce Attorney

Dividing businesses in divorce can be an arduous and contentious process, and it is critical for business owners contemplating ending their marriage to understand how it may impact their ownership interests. If you need clarity to Florida’s divorce laws, you should meet with an attorney as soon as possible. Susan Brown of the law firm of Susan R. Brown, PA, is a trusted Ft. Lauderdale divorce attorney with ample experience handling complicated dissolution proceedings, and if you engage her services, she will help you take the measures necessary to protect your interests. Ms. Brown’s office is located in Plantation, and she frequently represents people in divorce actions in cities throughout Broward County, including Fort Lauderdale, Plantation, Coral Springs, Parkland, Deerfield Beach, Weston, Cooper City, Pembroke Pines, Davie, and Southwest Ranches. You can contact Ms. Brown to arrange a confidential meeting by using the online form or calling 954-474-9500.