Under Florida divorce law, spouses are entitled to receive a fair or equitable division of marital and/or separate property. However, it is ultimately up to the judge to decide if a 50/50 split is warranted. After hearing all evidence during a divorce proceeding, a judge will evaluate certain factors, such as length of the marriage, spousal contributions to the business, and the economic circumstances of either spouse.
If one spouse owns a business prior to getting married, it’s possible the other spouse could receive a portion of the business as part of the divorce judgment.
What Constitutes Separate Property and Marital Property During a Divorce?
Separate (nonmarital) property is property owned by either spouse before they were married. Separate property could be anything from money or antiques to land, assorted valuables, or heirlooms. Gifts given to one spouse exclusively or items inherited by one spouse are also considered separate property.
Marital property involves assets acquired by a couple after they were married. Marital property can be held by one spouse or both spouses. Examples of common marital assets include pensions, IRAs, 401Ks, annuities, and stocks.
Is a Business Marital Property When It Is Owned By One Divorcing Spouse?
When one spouse already owned a business before they got married, and the value of that business increased during the marriage, only the original value of their business would be considered separate property.
For example, John owned a small roofing company before he married Beth. The value of his roofing company at the time he married was estimated to be $100,000. During the 10 years he was married to Beth, the value of his roofing company increased to $200,000. This means it is legally feasible Beth could receive $100,000 as part of the divorce settlement.
However, this scenario does not guarantee Beth will be awarded $100,000. John’s divorce lawyer may be able to show that Beth contributed nothing to helping John grow his business. She could have cheated constantly on John, spent money recklessly, or otherwise neglected general marital expectations.
Commingling of Separate and Marital Property
In some divorce cases, separate and marital property may be combined intentionally or inadvertently. If Beth closed her bank account before getting married to John and made deposits into John’s bank account after they were married, John’s bank account will likely be designated as marital property during divorce proceedings.
Commingling can also involve John’s business. During the first year of marriage, Beth continued working at her bank teller job she had held for the past five years. When John’s business started taking off, she quit that job and began working as the primary secretary for his roofing business. Their divorce judge may consider the fact that Beth contributed to John’s company for eight of the 10 years they were married and award Beth 50 percent of the business.
Florida divorce judges also examine other factors when determining if a spouse gets a portion of the other spouse’s business. Estimated future earnings from the business, possible losses that may be foreseeable, and liquidation value could be taken into consideration during a divorce.
Do You Own a Business and Are Considering Divorce? Contact Bergman Family Law Today for Expert Legal Representation
Divorce is always stressful and complicated but when a business is involved, the stress and complexity doubles. Getting experienced legal support from a skilled divorced lawyer at Bergman Family Law will relieve the stress of worrying whether your assets and rights will be fully protected throughout your divorce. Call today to schedule a consultation appointment.