Classifying and Dividing Business Property in a Port St. Lucie Divorce
Very small businesses with fewer than 50 employees account for more than a third of the job growth in the United States. These thriving businesses are also very likely to be caught in divorce proceedings. When that happens, there are emotional and financial issues to untangle.
Emotionally, a small business usually represents security. In many cases, the business is the family’s primary or sole means of income. Additionally, a small business often represents a legacy. Many business owners look forward to the day when they hand over the reigns of their car dealership, insurance agency, restaurant, or other small business to their children. Port St. Lucie divorce lawyers have their work cut out for them in these cases, because these situations are difficult to deal with.
But most of the issues in this area concern financial division, as outlined below. Small business owners who are going through a divorce, along with their attorneys, must consider several questions.
Classifying Business Property in a Divorce
The first step in classifying marital business property is often one of the most complicated ones. Businesses usually do not follow the normal classification rules.
If Wife had a service business before the marriage, the whole thing is not necessarily non-marital property if she gets a divorce. Many times, a spouse works at a business either for free or for a greatly reduced salary. If the spouse gave up career opportunities elsewhere to work in the family business, that spouse deserves some financial compensation.
Business goodwill is an issue too. This intangible quality is usually part of the business value. If the goodwill comes from a name (McDonald’s Restaurant), the goodwill is probably marital property. If the goodwill comes from an individual (Flo’s Beauty Shop), the goodwill may be non-marital property.
Real estate businesses, such as owning a rental house, can be even more complex. Assume Husband owned a rental house prior to the marriage, and Wife used a wedding gift from her parents to fix up the house. Depending on the facts, the house could be entirely his, entirely hers, or jointly owned.
If Wife’s gift went to cosmetic upgrades, like new curtains and new carpet, a judge might rule that the de minimis improvements were not enough to alter the character of the property. Therefore, it is still Husband’s separate property. But the reverse may be true if the house was unrentable before Wife funded major renovations, like a new foundation. Or, more probably, Husband and Wife might jointly own the property.
Division and Distribution Options
In a number of situations, the judge orders no division. Some people are better business partners than spouses. In light of the aforementioned emotional investment, many spouses are willing to try joint ownership. In most cases, it works pretty well.
A buy-out may be an option as well. One spouse gets the business, and the other spouse gets cash. An offset, such as a disproportionate home equity share, may be part of this process.
Selling the business and dividing the proceeds is usually the last option, but sometimes, it’s also the best option. Generally, the spouses must agree on a business appraiser who uses one of several different models to ascertain the business value. Then, the business is subject to division along with all other marital property. That means using the factors listed in Florida law, such as the length of the marriage and the relative contributions of each spouse.
Reach Out to a Dedicated Lawyer
Commercial property is difficult to divide in a divorce. For a free consultation with an experienced family law attorney in Port St. Lucie, contact Eighmie Law Firm, P.A. Convenient payment plans are available.