Two Decades Of Florida Family Law Experience

Strategies to shield your business from your divorce

On Behalf of | Sep 29, 2023 | Divorce

Business ownership complicates divorces because splitting spouses must divide their shared value in the enterprise. Without any kind of plan in place that specifies a valuation method or how to buy or sell shares in the business, Florida family law will force you to work out these details during an emotional and possibly contentious time in your life. For this reason, the best time to divorce-proof your business is before a relationship breaks down. Both spouses can benefit by developing a plan in the event of divorce.

Start with the business structure

A shareholder agreement or partnership structure allows you, your spouse and other business associates to establish the percentages of ownership and control. This documentation could limit disputes about how much of a business a person has a right to claim during divorce negotiations.

Pre or postnuptial agreements

A prenuptial agreement allows both of you to decide what assets will remain separate from jointly held marital assets. Should you start a business after getting married, you can prepare a postnuptial agreement that addresses concerns about business ownership.

Buy-sell agreements

A buy-sell agreement works in conjunction with a pre or postnuptial agreement. The buy-sell document gives you a chance to select a valuation method that is most appropriate for your business. The valuation formula specified in the buy-sell agreement will provide a workable foundation for negotiating the division of business assets.

This agreement also describes the method for how to cash out a business partner during a divorce. For example, it might require that a divorcing spouse be paid out in cash. This prevents a situation where a spouse, who had only a small or nonexistent role in running the company, suddenly acquires shares and has influence over operations.