Going through a divorce is a stressful event, with many factors to consider. If a couple owns a family business together, it can add to the difficulty. A knowledgeable Palm Beach Gardens divorce attorney can help protect your interest in a family business when you are ending a marriage. I am William Wallshein, and I have more than three decades of experience practicing law. A majority of that time I spent helping clients determine the proper value of their business as they prepare to divide their assets. As a former certified public accountant, I have the knowledge to analyze a business and protect your interest whether you’re an owner, shareholder, or spouse.Family Businesses as Marital Property in South Florida
In Florida, a business started during a marriage is most likely considered marital property. Conversely, if one spouse started the business before the marriage, it would likely be considered a nonmarital asset. However, a nonmarital business could still have some value as a marital asset if, for example, the value of the business increased during the marriage. The marital portion of a business is subject to equitable distribution between a couple going through a divorce. After the court determines what portion of the business is marital, it determines the value of the business as an asset so that the value may be distributed to each spouse fairly. Businesses can be valued either as ongoing enterprises or based on their liquidation value. The preferred method is as an on-going business that will stay functioning following a divorce.
If a couple’s assets include a privately held business, it is important to obtain a fair and accurate business valuation. Florida courts determine the value of a business by evaluating competent substantial evidence presented by the parties. It is important to prepare this evidence using capable, independent experts who can properly present information regarding finance, forensic accounting, the impact of any pensions, and related issues.
Depending on who participated in the business, as well as how the business was structured, the approaches to determining its value may differ. If both spouses participate in the business, all agreements are closely examined to determine each party’s rights. These agreements may include partnership, limited liability corporation, and shareholder contracts, as well as any prenuptial or postnuptial agreements. For situations when only one spouse was involved in the business, the rights of the other spouse are established by analyzing the following factors:
- How long the marriage lasted
- What role the non-business owner spouse played in the marriage
- Whether the non-business owner spouse supported the other’s education
- Whether any nuptial agreements existed
A business can be valued using various approaches. The market approach, which is most common, looks at the market price of other companies in the same or similar business being actively traded in a free and open market. Meanwhile, the asset approach consists of the book value of the stock and financial income of the business, while the income approach is based on the business’ earning capacity. When trying to value your business during a divorce, it is important to consult an experienced attorney to ensure your rights are protected.
After a business’ value is determined, the court will proportion interests based on equitable distribution. This process will often account for other marital assets to prevent disrupting the business while also ensuring fair and equal division of assets.Discuss Your Business With a Seasoned Family Attorney in West Palm Beach
Deciding the value and interest in a company can be a complex and emotional struggle during a divorce. A diligent family lawyer in West Palm Beach can make sure your business is valued accurately and your needs are asserted in court. My name is William Wallshein, and I have the skill to address issues related to your business interests. I represent clients throughout South Florida, including Palm Beach, Martin, and Broward Counties, in all aspects of divorce and family law proceedings. Please call 561-533-1221 to schedule a free initial consultation, or contact me online. We take credit cards.