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Attorney Moe DeWitt of the Dewitt Law Firm explains what happens to a marital business in a divorce in Florida.
Business Valuation during Divorce in Florida
As part of a divorce many assets are subject to equitable distribution, including businesses. When a closely held or marital business is involved in a divorce case, it may present complex issues that must be resolved through a business valuation. First, we must determine whether the business is marital or has a marital component. Assuming that the business is at least partially marital, the value of the martial business, or the marital portion of the business, must be determined. In order to determine the value of the business, a business appraiser will need to conduct a valuation to provide an expert opinion as to the value of the business. Depending on the type of business this can be a complex analysis.
Is the Business Marital?
If a business interest was acquired during the marriage using marital funds, it will typically be considered marital. However, even if the business was acquired prior to the marriage, it may have a martial component. If marital funds or efforts were invested into the business, then a portion of the business may be martial.
For example, if the Husband owns a surgery center prior to marriage, but during the marriage invests $200,000 of marital funds into the business to build an expansion wing, then the $200,000 plus any increase in the value of the business from the expansion wing may be considered marital. Additionally, an increase in the value of the business may be considered marital if it was derived through marital efforts.
Determining whether a business is marital or non-marital, is not always an easy task and may require a forensic accountant to track funds and analyze revenues.
Why do I need a Business Valuation?
Whenever there is an issue regarding the valuation of a business, it is wise to have an independent business valuation performed by a financial expert. If you agree to a value without a business valuation, you may waive your rights if the actual value is substantially higher. Sometimes people operate under the misguided belief that a business appraisal or valuation is too expensive. However, it could be much costlier if you significantly underestimate one of the most significant assets.