A lot of families out there own a small business. Spouses often work hard together to grow the business and increase its revenues. But when relationship woes threaten a marriage, the business may be at stake. If you’re headed for marriage dissolution, then you need to make sure that you’re getting your fair share of the marital estate, which means that you’re getting what you deserve out of the family business. Here are a few ways to do that:
- Consider whether the business is a marital asset: Remember, under Florida law you’re entitled to an equitable, though not necessarily equal, portion of the marital estate. This means that before you can secure a piece of the family business, you have to prove that it is, in fact, a martial asset. To do so, you’ll need to analyze when the business was created, where the funds that were used to start the business came from, and the contributions that each spouse made to the business’s development and operations. The more you can link the business to your own contributions or show that business funds were comingled with marital funds, the more likely you are to show that the business is a marital asset that should be subjected to the property division process.
- Assess your prenuptial agreement: If you have a prenuptial agreement in place, then this document is probably going to control how marital assets are divided. It might even specify that the business is to be considered individual property. If you don’t have a prenuptial agreement in place, then be wary of your spouse coming to you with a postnuptial agreement at any time that looks to keep the family business out of any potential property division process. This can leave you in the lurch should you end up heading for divorce.
- Access financial records: Your business’s accounting records can be manipulated to give the impression that the business is losing money when it really isn’t. This is a tactic used far too often by spouses who try to hide money with the intent of keeping it out of the property division process. Therefore, ensure that you have access to your business’s financial records and can analyze them to give you a clear sense of where the business stands.
- Use the proper valuation method: Before you can ensure that you’re getting your fair share of the family business, you have to know what it’s worth. You can only determine that through the valuation process. There are a number of methods of valuation, though, including market capitalization and the earnings multiplier method. Know which valuation technique best positions you in negotiations.
- Know what you want: Prior to sitting down at the negotiation table, carefully consider what you want out of the future. After all, there may be a lot of options at your disposal. Do you want to continue to own the business? Do you want a clean break with your spouse? Do you just want a quick infusion of cash even if that means cutting ties with the business? The answers to these questions can help you identify your priorities and give you direction as you navigate the property division process.
Your financial wellbeing is at stake in your divorce. With that in mind, you need to remember to be thorough and prepared before starting the negotiation and litigation processes. Attorneys who are well-versed in this area of the law can work with you to ensure that you have the legal strategy on your side necessary to position you as strongly as possible for success.