Florida law is unambiguous that ordering former spouses to remain in business together creates a mess of a situation. In a recent case out of Broward County, a judge ruled that both spouses got to keep 50% of the business interest. Even though family law cases are tried in a court of equity and most everything can be split in half a business is the exception rather than the rule. The appellate court found fault in this distribution because clearly if the spouses couldn’t stay married working professionally was also not going to work.
The solution in all divorce cases involving business is first to do an evaluation of the business. How much is it worth and is this value marital?
Section 61.075 of the Florida Statutes provides that in any contested divorce, the court must make specific written findings identifying, valuing, and distributing marital assets. This includes businesses. A court that fails to this is bound to get reversed in the appellate court.
In a practical sense, the job of valuing a business is done before the case goes to trial. Experienced divorce lawyers employ the services of a forensic accountant who have the expertise in analyzing the business finances and determining value. Sometimes we may even have a “battle of the experts” where the other spouse has hired their expert to determine the value. Both experts testify and present their opinion. The judge makes the ultimate ruling on the value of the business.
Once a value is determined it then goes into the marital “pot” to be divided. One spouse will keep the business, but the other spouse will receive his or her fair share.
In all cases, however, the judge cannot order that both spouses remain in business together by awarding both spouses the business.