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How to Protect Your Business During Divorce in Florida

NOTE: Our firm only handles matters related to business, litigation, and employment law.

We do not handle divorce cases. If you have questions about divorce, talk to a divorce lawyer.

Headed for divorce?

Ending a marriage is stressful and emotional on its own, but many business owners have the added concern that their company will be broken, divided, and possibly ruined should they get divorced.

Maybe your divorce is imminent, or perhaps you just want to ensure your LLC is protected if the worst should happen.

What Assets Are Protected in a Divorce in Florida?

The Sunshine State uses an “equitable distribution” model to divide marital assets during divorce. This means that marital property isn’t necessarily split down the middle equally, but assets are divided in a way the court deems fair.

Both personal and business assets of a couple may be considered “marital property” and are subject to equitable distribution during divorce.

Exceptions include assets that:

  • Were gained before the spouses married
  • Are income that was earned on a non-marital asset
  • Was a gift or inheritance received by one spouse from someone not in the marriage
  • Are listed in a prenuptial agreement or postnuptial agreement as being excluded from the marital property division

Any assets that fall under one of these exceptions will be considered separate, non-marital property in a divorce. However, those that don’t will need to be part of divorce negotiations. If spouses can’t come to an agreement on any particular item, the court may make the determination for them.

How is an LLC Treated in a Divorce in Florida?

Even if your LLC falls under one of the above exceptions to marital property division, a court could still determine that it’s not separate property and require that the business be split between the spouses.

For example, if marital income, assets, or holdings were used to invest in the business at any point during the marriage, the business could now be considered marital property. Additionally, if your spouse contributed to the LLC regularly or in a crucial way, they may be legally entitled to gain an equitable portion of it during your divorce.

Ways to Protect Your Business Assets in a Divorce

Knowing how damaging divorce can be to your successful business, it’s essential to take steps to protect it both before marriage, throughout your marriage, and during the divorce process. An experienced divorce attorney can assist with that process.

This will ensure your business, as well as any stakeholders and business partners, are shielded from the financial blow of dividing up the business or having an ex-spouse as an unwanted shareholder in the company.

#1: Use Prenuptial or Postnuptial Agreements

As you’ve probably guessed, prenuptial agreements are signed before a couple is married and postnuptial agreements are signed once the couple is legally married. They’re certainly not the most romantic discussions to have with your soon-to-be or current spouse, but these documents are crucial for safeguarding business interests during divorce.

You can include clauses in your marital agreement that address how the couple’s business assets will be handled should a divorce occur.

#2: Set Up a Trust

Couples that have a high net worth may benefit from setting up a trust to transfer business assets. Creating an irrevocable trust essentially transfers ownership of the business to the trust itself instead of having the spouse or the couple remain the business owner.

A trust effectively keeps your LLC as separate property from marital assets and protects it from being divided during a divorce.

#3: Refrain from Mixing Marital and Business Finances

It’s common for business owners to invest their own holdings and assets into a business. This gives them a stake in the business itself and often helps keep the business going during times of economic duress.

However, if the funds that you’re investing into the business are considered marital assets, this makes the entire business vulnerable to property division should you get divorced down the road.

It’s best to invest only assets that are considered non-marital into your LLC.

#4: Negotiate Divorce Terms That Keep the Business Intact

If you’re already headed for divorce and don’t have any safeguards in place to protect your business, you’re not necessarily doomed yet. There’s still an opportunity to keep the business whole during divorce negotiations.

Consider what assets you’d be willing to give up or which debts you would be willing to incur in order to keep control of the business after your divorce. An experienced divorce attorney that’s fighting for your interests will be instrumental during the mediation and negotiation process. Along with contacting a divorce attorney, you should also consult with an experienced business attorney to make sure your assets are protected.

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