Written by: Lenorae Atter, Attorney at Law
In a Florida divorce, regardless of fault, the marital property, debts and assets are to be divided equally. Florida divorce requires that marital items be equitably distributed through the court if the parties cannot otherwise agree on the division of assets, debts, and the like, with few exceptions. The one thing that often can be left out when couples try to divorce on their own is the division of a business. Yes, in Florida, if you start and own a business during the marriage, then that is a marital asset (sometimes a liability) that should be divided by the parties. However, it also means that there is another party to your divorce, the actual business itself, because the business has an overall interest in the outcome of the case.
For example Wanda and Hank have decided to divorce after twenty (20) years of marriage. About five (5) years into the marriage, Wanda started her own bakery, Wanda’s Treats, and it has been successful since it opened. Wanda is now more of a managing owner, than acting as lead baker so the business is self-running at this point in their marriage. Hank files for divorce and in his petition, requests that the business be equitably divided between him and Wanda. Normally, in filing for a divorce, the case will only list the parties as Hank and Wanda. However, since Hank wants part of the business, the business itself actually has a stake in the divorce and should actually be named as an additional party to the suit. When that occurs, Hank not only needs to serve Wanda with divorce papers, but also serve Wanda’s Treats’ registered agent, separately. Mathis v. Mathis, 2D11-298 (Fla. 2nd DCA June 15, 2012). By doing so, the business can actually have its own attorney as well to make certain that the business valuation is fair to the business and that any division is done to preserve the integrity of “Wanda’s Treats.”
In a divorce, to determine how the parties will divide a business, normally a business valuation has to be completed to determine its actual value. Generally, one or both parties, and sometimes even the business itself, may have their own valuation completed by a competent third party business valuator. However, the parties can also agree on one individual to complete the valuation and agree that they will accept the number established by the individual. The business valuation gives details as to the value of the businesses actual things (i.e. computer, ovens, mixers, etc.) and the approximate value of the business with regards to its name and product and what it may sell for if the business were purchased by someone else.
In determining the equal distribution of such an asset, the debts are also factored in because a spouse is not only entitled to the asset value, but also the debt associated with the business. So, the overall value would have a net amount, which would be the value minus the debts associated with the business and the court will ultimately have to determine how that will be divided between Husband and Wife.
If you own a business during your marriage, then you should speak with an experienced family law attorney to assist you in the divorce to better understand your rights and options.