Premarital Business Assets And Equitable Distribution

Unless the couple has a prenuptial agreement that says otherwise, Florida law regards all income earned by either spouse during the marriage as marital property, which means that the property is subject to equitable distribution in a divorce.  This means that, if a business you owned before marriage appreciated in value during the marriage, then the appreciation counts as marital property.  For example, if your ownership interest in a company was worth $100,000 when you got married and $500,000 when you filed for divorce, then the $400,000 representing the increase in the company’s value would be marital property, and the court could award a portion of it to your spouse.  Of course, businesses receive and spend money much more quickly than individuals do, so the value of a company is always in a state of flux.  This can be a source of conflict in divorce cases; you might say that the value of your company increased by X dollars, and your spouse might say that it increased by Y dollars, and you might both be right, depending on how you define “value.”  A Palm Beach County divorce lawyer can help you resolve this and other issues related to equitable distribution.

Former Spouse’s Disagree Over Valuation of Husband’s Share of Business

Daniel’s father established a boat dealership in Florida when Daniel and his siblings were children.  When his father retired, ownership of the business passed to his children.  Daniel and his brother ran the business, and each of them owned 47.5 percent of the company; their sister owned the remaining five percent, although she was not involved in the operation of the business.  This arrangement was in place when Daniel and Laura married in 1998, and it remained in place when they divorced in 2012, after having three children together.

The parties disagreed about the valuation of the company, which it was necessary to determine before deciding how much the business had appreciated during the marriage, because the amount of appreciation would count as marital property.  Both parties brought experts who used different formulae to calculate the appreciation of the business.  The trial court accepted the opinion of Laura’s expert, who counted the pre-tax value of Daniel’s share of the business, whereas Daniel’s expert counted the net value after the business had paid taxes.  Daniel appealed the ruling, also arguing that businesses must keep some money on hand and cannot simply liquidate their entire cash reserves to distribute them to shareholders every year.  The appeals court reversed the trial court’s ruling and remanded the case to the trial court for additional findings.

Contact Us Today for Help

A Boca Raton divorce lawyer can help you if your ex-spouse is trying to claim more than their fair share of the assets you have acquired through your ownership interest in a business you have owned since before you were married.  Contact Schwartz | White for a consultation.

Resource:

scholar.google.com/scholar_case?case=11762004492277651786&q=divorce+model&hl=en&as_sdt=4,10&as_ylo=2011&as_yhi=2021