Is my business marital property in Florida?

It depends. Businesses started during marriage are typically marital property. Pre-marital businesses may be partially marital if they appreciated during the marriage due to either spouse's efforts or marital fund contributions. Under F.S. 61.075, even non-marital business appreciation can become marital property.

How do Florida courts value a business in divorce?

Courts use professional business valuators who apply asset-based, income-based, or market-based methods depending on the business type. Key factors include tangible assets, earning capacity, goodwill, and owner's compensation. Both parties can hire their own experts if they disagree.

Can a prenup protect my business in Florida divorce?

Yes. A valid prenuptial agreement is the strongest protection. It can classify the business as separate property, limit claims to appreciation, and establish valuation methods. The agreement must meet F.S. 61.079 requirements: written, signed, full disclosure, no coercion, and not unconscionable.

What happens to my business if I get divorced in Florida?

Common outcomes include: (1) one spouse buys out the other's marital share, (2) the business is sold and proceeds divided, (3) the business is offset against other assets, or (4) rarely, continued co-ownership. Most business owners prefer a buyout to keep operating the business.

How can I protect my business during divorce?

Strategies include maintaining strict separation of business and personal finances, documenting pre-marital ownership and contributions, getting a professional valuation, and negotiating a buyout using other assets. If possible, a prenuptial or postnuptial agreement provides the strongest protection.

How to Protect Your Business in a Florida Divorce

Quick Answer: Your business may be partially or fully subject to division in divorce. Protection strategies include prenuptial/postnuptial agreements, maintaining separate finances, proper corporate structure, and negotiating buyouts. The key is preparation—ideally before divorce is on the horizon.

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Is Your Business Marital Property?

Under Florida's equitable distribution law (F.S. 61.075), courts classify assets as marital or non-marital:

Marital Property (Subject to Division)

Your business is likely marital property if:

Started during the marriage
Spouse contributed to its growth (directly or indirectly)
Marital funds were invested in it
Appreciation occurred during the marriage due to either spouse's efforts

Non-Marital Property (Protected)

Your business may be non-marital if:

Owned entirely before marriage AND
Kept completely separate from marital finances AND
Spouse made no contributions to its operation or growth

The Commingling Problem

Even a pre-marital business can become partially marital through:

F.S. 61.075(6)(a)(1): Marital assets include "the enhancement in value and appreciation of nonmarital assets resulting either from the efforts of either party during the marriage or from the contribution to or expenditure thereon of marital funds."

Example: You started a business worth $100,000 before marriage. During 10 years of marriage, it grew to $500,000. The $400,000 appreciation may be marital property if it resulted from your efforts during the marriage or marital fund contributions.

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How Florida Courts Value Businesses

Common Valuation Methods

Method	Best For	How It Works
Asset-Based	Asset-heavy businesses	Value of assets minus liabilities
Income-Based	Profitable businesses	Capitalized earnings or cash flow
Market-Based	Businesses with comparables	What similar businesses sold for

The Valuation Process

**Hire a forensic accountant or business valuator** (often court-appointed or agreed upon)

**Gather financial records** (tax returns, P&Ls, balance sheets, bank statements)

**Determine valuation date** (usually date of filing or trial)

**Apply appropriate methodology**

**Account for discounts** (minority interest, lack of marketability)

Key Valuation Issues

**Goodwill:** The value above tangible assets—often the most contested element. See our article on personal vs. enterprise goodwill.

**Owner's Compensation:** If you pay yourself below or above market rate, valuators adjust.

**Hidden Income:** Cash businesses face extra scrutiny. Forensic accountants look for lifestyle vs. reported income discrepancies.

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Strategies to Protect Your Business

1. Prenuptial or Postnuptial Agreement

The strongest protection. A valid agreement can:

Classify the business as separate property
Limit spouse's claim to appreciation
Establish valuation methods in advance
Waive claims to goodwill

Requirements for Validity (F.S. 61.079):

In writing and signed by both parties
Full financial disclosure
No fraud, duress, or coercion
Both parties had opportunity for independent counsel
Not unconscionable

If you're already married, a postnuptial agreement can provide similar protection.

→ **Protect your business now**: Our [Prenuptial Agreement](/services/prenup) or [Postnuptial Agreement](/services/postnup) services create enforceable protection for your business assets.

2. Maintain Strict Separation

If no agreement exists, separation is critical:

Do:

Keep business accounts completely separate from personal/joint accounts
Pay yourself a reasonable salary (don't commingle)
Document all capital contributions
Maintain corporate formalities
Keep spouse off business accounts and titles

Don't:

Use marital funds for business expenses
Deposit business income into joint accounts
Put spouse on business loans or leases
Use business assets for personal expenses

3. Proper Corporate Structure

Consider:

**LLC or Corporation:** Creates legal separation between you and the business
**Operating Agreement:** Can include provisions about divorce
**Buy-Sell Agreement:** If you have partners, can address divorce scenarios
**Trust Ownership:** In some cases, trust-owned businesses have more protection

4. Pay Your Spouse a Salary (Strategically)

If your spouse works in the business:

Pay them a documented, reasonable salary
This may reduce their claim to equity
Creates clear compensation vs. ownership distinction

Caution: This can backfire if not done correctly. Get legal advice.

5. Document Everything

Maintain clear records of:

Pre-marital value and ownership
Capital contributions (source of funds)
Your spouse's involvement (or lack thereof)
Business decisions and growth factors

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Options for Dividing a Business in Divorce

Option 1: Buyout

Most common solution:

Business owner keeps the business
Pays spouse their share of the marital portion
Payment can be lump sum or structured over time

Considerations:

Need liquidity or financing
Valuation becomes critical (owner wants low, spouse wants high)
May need to refinance business debt in one name

Option 2: Sell the Business

Sometimes the cleanest solution:

Sell to third party
Divide proceeds according to marital/non-marital split

Considerations:

Market timing matters
Sale costs reduce proceeds
Losing the business entirely

Option 3: Co-Ownership (Rare)

Continuing to co-own post-divorce:

Unusual and often problematic
Requires detailed operating agreement
May work for passive investments

Generally not recommended for operating businesses.

Option 4: Offset With Other Assets

Trade equity for other assets:

Spouse gets house, retirement accounts
Business owner keeps entire business
Must balance equitably

Often the most practical solution if sufficient other assets exist.

→ **Need a settlement agreement?** Our [Marital Settlement Agreement](/services/settlement-agreement) service can structure buyouts and asset offsets to protect your business.

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What About Business Debt?

Business debts are also divided equitably:

Business loans in both names: both may remain liable
Loans in one name: creditors still pursue that person
Division doesn't bind creditors—only between spouses

Protection: Indemnification clauses requiring one spouse to hold the other harmless.

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Special Situations

Professional Practices (Doctors, Lawyers, CPAs)

Professional practices present unique issues:

Often heavily dependent on personal goodwill
May have limited transferability
License belongs to individual, not the marriage
Florida recognizes personal goodwill—but it's not divisible

Family Businesses

If the business involves extended family:

Other family members may have claims
Partnership/shareholder agreements matter
Family dynamics add complexity

Startups and Unvested Equity

For startup founders:

Unvested stock options may be partially marital
Future value is speculative but not ignored
"Coverture fraction" may apply to stock vesting over time

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Common Mistakes to Avoid

1. Hiding Assets or Income

Forensic accountants find hidden income. Courts punish dishonesty severely—you may lose more than you hid.

2. Suddenly Reducing Business Value

Dramatic changes before divorce raise red flags:

Sudden drop in revenue
Large "expenses" to related parties
Unusual distributions or bonuses

3. Not Getting a Proper Valuation

Relying on "what I think it's worth" or a quick estimate is dangerous. Invest in professional valuation.

4. Ignoring Tax Implications

Business division has tax consequences:

Asset sales may trigger capital gains
Structured buyouts have different tax treatment
Entity type affects tax on division

5. Waiting Too Long

The earlier you plan, the more options you have. Prenups are best, but even during marriage you can take protective steps.

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Get Professional Help

Business division requires expertise in both family law and business valuation. Schedule a $95 Strategy Session to discuss protecting your business.