Does a Couple Have to Stay in Business Together Following a Divorce?
When it comes to dividing marital property in a Florida divorce case, some assets are more easily dealt with than others. For example, it is relatively simple to divide up checking accounts and other cash-based assets. But what if the divorcing couple owns a family or closely held business? Are the parties expected to stay together as co-owners despite the end of their personal relationship?
Courts Try to Avoid “Intolerable” Settlements When It Comes to Spouse-Owned Businesses
Generally speaking, the answer is “no.” Florida courts will not force divorcing parties to “operate as business partners” unless that is their wish. For example, in a recent decision from the Florida First District Court of Appeals, Bowen v. Volz, that court overturned a trial judge’s decision to give each spouse in a divorce a 50-percent share of their marital business. The trial judge justified this ruling on the grounds that the parties themselves failed to present evidence on the “actual worth” of the business, making it impossible to value the asset for purposes of division.
But as the First District explained, the proper remedy in such a case is to require the parties to “present proper valuation evidence for the company so that the trial court may, as the parties agree, award this asset to one of the spouses.” While the other spouse would then be entitled to compensation for their share of the business, they would no longer be a functional co-owner.
The First District cited a long line of prior Florida cases in support of this remedy. For instance, in a 1989 case, Robbins v. Robbins, the Third District explained that giving one spouse a 50-percent interest in a business primarily managed by the other spouse creates an “intolerable” arrangement, as the non-management spouse would be at a “distinct disadvantage to the spouse who runs the business.”
Again, the way to deal with these cases is for the trial court to value the business as a marital asset and then work with the parties to devise a plan that compensates the non-management spouse while simultaneously minimizing disruption to the overall business.
In some situations, this simply means having one spouse buyout the other spouse’s interest in the business. But as the Robbins court explained, that is not the only possible solution. Other alternatives include requiring one spouse to purchase the other’s interest “within a reasonable time,” creating an installment plan for a buyout, or even selling the business outright and dividing the proceeds.
Get Assistance with Your Divorce from a Boca Raton Divorce Attorney
As you can see, owning a business can complicate a divorce settlement. An experienced Boca Raton divorce lawyer can help you work through this and other issues. Contact WiseLieberman PLLC today at 561-488-7788 to schedule a confidential consultation with one of our divorce and family law attorneys.