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How divorce may affect the state of a business

| Oct 28, 2020 | divorce

If you’re a married business owner, a divorce can greatly affect how your company functions on a day-to-day basis. It could even impact the percentage of the business you own after the property division process. Thankfully, there are a few ways to ensure that the effect on your business in Florida isn’t too harsh.

Marital property

One of the most common issues that arise within the divorce process is marital property. Marital property includes assets that were developed during the time spent married with your ex-spouse. These can include stocks, bonds and, yes, even a business. Therefore, it is highly recommended to avoid using assets such as your home to take out a business loan. It should also be noted that over nine states require assets to be split right down the middle with your ex-spouse. The other 41 states, including Florida, are considered equitable distribution locations. This means division is done on an equitable basis rather than 50/50.

Protecting the business

The best thing you can do to lessen the impact on your business is to avoid co-mingling in your business with marital property. You should also make sure to pay yourself a decent salary. Many business owners try to avoid paying themselves in order to reinvest their earnings back into the business. The disadvantage here is that larger amounts of money are then at stake in the event of a divorce.

For many, the most important issue is ownership of the business. Placing your business into a trust is one of the best ways to protect it during a divorce. This will allow you to run the company without it actually being in your name.

The information above makes it clear that the divorce process can be rather difficult to navigate through alone. A family law attorney could help you through the process and potentially protect your business.