A divorce is often an emotionally challenging time. A divorce can also present legal and financial challenges. This can be especially true if one of the spouses was a business owner or part-owner during the marriage. Determining whether or not the business was a marital asset and, if it wasn’t, determining which amount of the business’ increase in worth was due to marital efforts can be complicated and require skilled experts and intensive litigation in order to protect your rights and interests fully. To make sure that you get your appropriate share of a non-marital business as part of your equitable distribution, you should make sure to work with a skilled and knowledgeable Florida property division attorney.
A case from the Tampa Bay area provides an example of how challenging these disputes can be. Daniel and Laura were married for 14 years when the husband filed for divorce in the fall of 2012. They reached an agreement on many things that couples dispute, like the marital residence and the kids. There was one issue, though, on which they could not agree, and it related to Daniel’s family’s business. Daniel’s family owned a boat dealership business in Clearwater. He and Laura could not come to an agreement regarding the value of his ownership stake in the business.
The hearing revealed that Daniel’s father started the business and that Daniel and his siblings had worked there since they were teenagers. At various intervals, the father would give the children gifts of stock in the company. When Daniel married, he still owned only a small amount of stock. After the father died, Daniel owned 47.5% of the company’s stock.
When you own an asset like this, there are several things that a court has to consider. First, the court has to decide whether the asset was marital or non-marital. In Daniel’s case, his ownership stake in the family business clearly was a non-marital asset.
That, of course, isn’t the end of the process. The court must also analyze whether “marital labor” contributed to an increase of the value of the non-marital asset. Daniel’s efforts expended during the marriage had clearly increased the value of the family business, which meant that the court was required to assess how much the value of the business increased and then equitably distribute that amount.
In this case, as is true of many cases involving high-value assets like this, the proof submitted regarding the increase of the value of the business (and the portion of that amount attributable to Daniel’s efforts) was extensive. Almost two full days in court were dedicated to the two sides’ expert witnesses’ testimony. Equitable distribution of business appreciation can involve financial/accounting experts, industry experts, and perhaps others.
This analysis can include many forms of asset appreciation. This can include assets that appreciate directly as a result of the spouse’s active management. It can also include assets that increase passively as long as “marital labor contributes to its value.” These distinctions can have massive ramifications. In Daniel’s case, he won his appeal because the errors that the trial court made led to that lower court misstating the value of the business by $1 million.
Whether your family law case involves the equitable distribution of a family business, child support, child custody, alimony, or some other issue, rely on experienced Miami divorce attorney Sara Saba for your legal needs. Attorney Saba has been providing reliable counsel and advocacy for her clients for more than 13 years. Contact us online or by calling (305) 450-8009 to schedule your consultation. Hablamos Español.