If I get Divorced, Will My Spouse be Entitled to Half of My Business?
Many of our clients have this exact question when they come to us looking to file for divorce. The answer is always different. Whether or not your spouse is going to be entitled to your business is going to depend on a couple things.
Is the Business Marital?
If your business was created prior to getting married, then the answer is no. Your spouse will not be entitled to take half of your business. If your business was marital, and by that, we mean founded or formed after your marriage, then yes, there is a high likelihood that your spouse is entitled to a portion of your business.
Appreciation of the Business
Although non-marital assets are not allowed to be distributed to the non-owning spouse, a court may award equitable distribution to a non-owning spouse to the extent that the non-marital asset appreciated in value during the marriage due to marital efforts. Therefore, if your spouse helped you renovate a building, or assisted with bookkeeping, or even if your time and labor attributed to the increase in value of the business, because those are marital efforts, your spouse may be entitled to the benefit of those efforts. However, in this case, your spouse would be entitled to a money award for their share of the marital appreciation of the business.
Rest Assured You Have Options
Before you start to picture you and your soon-to-be former spouse attempting to run your business together after you divorce, keep reading. The Courts understand that it is not often practical to require that former spouses continue to run a business together. Similarly, it is unlikely that your former spouse even would want to work with you or have ownership in your business. Therefore, in situations where you and your spouse have marital equity in a business, the courts will often award a pay out amount. This is beneficial for both parties in most cases, because it allows another spouse to at least walk away with the financial benefit that the business provided, and in some cases, the financial means to start their own business after divorce.
What About Ownership Shares
This area is going to be dependent on the company that the ownership shares belong to. If the company allows for the transfer of shares, then you very well may be required to transfer those assets to your spouse. However, for some spouses, it may be worth considering the financial impact of doing so. When it comes to income producing ownership shares, a spouse should consider the impact that equitable distribution of those shares could potentially have on an alimony reward. If those shares are responsible for a large portion of income earned by one spouse, once those shares are distributed, the income produced by them will not be able to be used for the purpose of calculating an alimony award. This concept is known as “double dipping.” For that reason, it is important to talk to your attorney about what the right course of action is for you, when you are contemplating the financial security of your future.
If you have any questions about this topic, collaborative divorce or how to move forward with one in the Tampa Bay area, then hire one of the top divorce lawyers. Call us: (813) 907-9807
Anton Garcia Law
Tampaattorneys.com
(813) 907-9807
