On behalf of South Tampa Law Group posted in blog on Friday, April 28, 2017.
Owning your own business can be a trying yet wonderful thing. There is a lot of pride in building something from nothing. However, if you started your business after getting married, or if the majority of your company’s growth occurred during your marriage, did you know that if you get a divorce, your spouse may have rights to a portion of your business?
Florida is an equitable distribution state. That means that each spouse should be able to walk away from the marriage with a fair division of assets. If your business is your biggest asset, it may be up for grabs unless you take steps to protect it well ahead of time.
What can I do to protect my company?
There are actually several things you may be able to do to protect your business long before divorce ever becomes an issue. If you are a business owner before marriage, you may want to consider having your soon-to-be spouse sign a prenuptial agreement. In this contract, you can list your business and its earnings and growth as separate property.
If, on the other hand, you are already married when you start your business, you may seek a postnuptial agreement, which can offer many of the same protections as a premarital contract.
Other possible ways to protect your business include:
- Pay yourself a salary that will not go back into the business
- Include divorce provisions in your business contracts
- Keep work life and home life separate
By working diligently to keep your business assets from co-mingling with your marital assets, it will be easier to claim it as separate property if divorce ever enters the picture.
What happens if a court determines that my business is marital property?
If this happens, you and your spouse will have to decide how you want to proceed. Will you run the business as partners? Will you try to buyout your spouse or take less in other marital assets in order to keep the full business to yourself? Or, do you sell the company and split the proceeds?
There are options available; you just have to decide which works best for your individual situation.
Divorce does not have to ruin your business if you take the steps necessary to protect it. An experienced attorney can help you do this by setting up prenuptial or postnuptial agreements. Otherwise, if divorce is already on the horizon, your legal counsel can assist you in achieving a property division settlement that is fair for both parties yet has little impact on your company.