Going through a divorce is stressful enough without the added hassle of worrying about harming or losing your business. But your business could be up for grabs, particularly if you built it during the marriage or your ex-spouse is a co-owner. If you’re beginning the divorce process and are concerned about your business, here are five steps you need to take now.
Know Your Rights
Florida uses an equitable division standard to divvy up marital property, which means the judge will divide your business according to what is fair. Before you file, you need to talk to a divorce lawyer who specializes in divorce-related business litigation. This is the best approach for determining the most likely outcome to your case, and can help you offer a reasonable settlement.
Determine Your Business’s Value
You need to know how much your business is worth, but this determination isn’t always easy. If you’re concerned that your spouse has hidden a portion of the business’s assets or you have not kept good records, a forensic accountant can help you unravel a complex financial trail. In most cases, the court will assess your business’s value based solely upon its assets and liabilities. If your business is partially dependent on your reputation, though, the court may adopt a “goodwill” approach to determine your business’s current and future value.
Determine How Your Business Will Be Managed
If you and your ex are co-owners of your business, settling your case is the best option. Otherwise it could be left to a court to decide how you manage the daily operations of your business – or even who retains ownership. Consider working with a mediator to negotiate the ins and outs of your business. You and your ex could even agree to continue co-ownership while signing a contract agreeing to be at the business at different times during the day.
Consider Buyout Options
If your ex is fighting you over a business you love, consider buying him or her out. This gives your ex access to rapid cash, and removes any future claim he or she might have over the business. Of course, a buyout requires an accurate appraisal, and you may end up fighting over the business’s value. But once you reach an appraisal value you can both live with, a buyout is a fairly straightforward process.
Protect Your Reputation
If your business depends on a good reputation, your ex can do real harm. Slander is illegal no matter who does it, but by the time you get around to suing, it may be too late. Instead, consider adding a clause to your divorce agreement mandating that your ex not speak negatively about your business online or in person. Doing so can dissuade an ex who plans to take his or her anger out on your professional reputation from doing so.