Mitigating the Risks of Business Depreciation During High Asset Divorces
Divorces can be complicated, and that is especially true if there are high assets involved. While both spouses must be transparent about all of their assets, it’s also crucial that they are valued accurately. Failure to do so can result in an uneven and even unfair distribution of assets.
In Florida, equitable distribution of marital assets is the guideline for divorce. That will include anything of value, whether property, house, bank accounts, or businesses.
When dividing the business asset, which may be the asset with the highest value, it first must be determined if the business is a marital asset. If it is, to mitigate the risks to the company during a divorce, some moves can be put into place either before or after the marriage to make its division more equitable.
When sizeable assets are involved, consulting with an experienced, compassionate family law attorney specializing in high-asset divorce can protect the impact on your business and, ultimately, on your relationship.
If one spouse owned the business before the marriage, kept assets in a separate account, and made no money with that business during the marriage, there would not be much to divide. However, any appreciation during the marriage is subject to division unless a prenuptial agreement specifies how the business will be divided.
Before the wedding, a prenuptial agreement should detail how the business assets will be distributed in a divorce. Separate attorneys will represent each partner, and the business division should be negotiated to include the division of depreciation and appreciation of the business.
Sometimes, the business will remain with one spouse, and its value can be offset by agreeing to divide other assets, such as a house or property.
A prenuptial agreement should consider the potential impact on other partners to mitigate risks to the business.
It may be challenging to determine the value of a business down the road, so its current value should be estimated, and both parties need to agree on the methodology to be used to value the asset in the future.
The benefit of a prenuptial agreement is that both partners enter into it when they are most agreeable, about to enter into marriage, and want to avoid conflicts in the future.
A postnuptial agreement is crafted after the marriage to determine what happens to a business in the event of a divorce. The other spouse may agree that the company is not subject to marital distribution, mainly if the other spouse founded it before the marriage. If that is not the case, the post-nup should establish how much appreciation or depreciation the spouses will share.
Suppose both spouses are involved in the business. In that case, they must determine whether, upon divorce, the company is dissolved, one partner retains ownership, or it continues under a new partnership agreement.
If you suspect your spouse is trying to conceal assets, Crystal Collins Spencer has the tools she needs to uncover hidden assets. She can bring in a forensic accountant to discover where assets are and their origin.
This is especially important if one spouse does not handle the family finances.
A forensic accountant is like a detective. They will conduct a detailed review of bank and tax documents to determine their consistency. Employers may help a divorcing spouse by withholding a bonus until the divorce is final. An employer can defer benefits, a company car, or a salary increase, so they are not subject to equitable distribution. A forensic accountant can uncover that tactic.
We may need to hire a valuation expert to determine the value of the business before its division in a Florida divorce.
Your Florida High Asset Divorce Attorney
If a divorce is imminent, the business can be protected by maintaining detailed records, including personal and business expenses and premarital versus marital funds.
Crystal Collins Spencer has extensive experience with high-asset divorces and can advise you to what extent the business is a marital asset or separate property. She has the experience to hire the experts needed to value the case for the court’s consideration and to gather the evidence essential to your argument.
This is not a time to try and litigate your most valuable asset. Divorce can complicate the simple division of assets. Call Crystal Collins Spencer at Spencer Law at her Pensacola office at 850-912-8080 to get started.