What Is Considered Marital Property in a Florida Divorce?
State law requires equitable distribution of marital assets and liabilities in a divorce. Each spouse’s separate property is set apart and not subject to distribution. Under the statute, marital assets and liabilities include:
- Any assets acquired during the marriage by either spouse or both;
- Any liabilities incurred during the marriage, either individually or by both spouses jointly;
- Appreciation or increase in value of any non marital assets during the marriage due to the efforts of either party or because of contributions or expenditures of marital funds or other marital assets;
- Paydown during the marriage of principal on a note and mortgage secured by nonmarital real property, if marital funds were used, along with a portion of any passive appreciation in the property;
- Gifts from the spouses to each other during the marriage; and
- All vested and unvested funds, rights, and benefits in pension, retirement, profit-sharing, deferred compensation, annuity, and insurance plans and programs accrued during the marriage.
All real property and all personal property jointly owned by both spouses is presumed to be marital property, whether it was acquired before or during the marriage. Any party making a claim to the contrary has the burden of proof. Business assets acquired during the marriage, or appreciation in value of a business acquired before the marriage during the marriage, may be treated as marital property and subject to equitable distribution.
How Does Marital Property Division Differ in Community Property and Equitable Distribution States?
In community property states, the courts consider all assets acquired by either spouse during the marriage to be joint property. Spouses are equal partners in the marriage, and all marital assets, including business assets, are divided equally between them in a divorce. Equitable distribution states such as Florida take a more flexible approach and focus more on overall fairness than on strict equality. In dividing marital property, the courts consider various factors, with the goal of treating both spouses fairly, based on the circumstance. Factors judges consider include:
- Length of the marriage
- Each spouse’s financial contributions to the marriage
- Non-financial contributions, such as childcare and homemaking
- Contributions of either spouse to the educational opportunities or personal career of the other spouse
How Are Business Assets Divided in a Florida Divorce?
If business assets are considered marital property, they are subject to equitable distribution. Common ways in which business assets are divided in a divorce include:
- One spouse buys out the other spouse’s interest in the business.
- The business is sold, and the proceeds are divided between the spouses.
It may be possible to reach an agreement, through mediation or otherwise, in which other marital assets are exchanged for a spouse’s share of business assets. Another option is for both parties to continue to co-own the business. Division of a business can be a complicated process, particularly in high-asset divorces.
What Options Are Available to Safeguard Your Business Assets?
One way to protect your business assets in case of a divorce is to enter into a prenuptial agreement (prenup) with your future spouse before marriage. Under the Florida Uniform Premarital Agreement Act, parties to a prenup may agree in writing to:
- Each party’s rights and obligations in any property owned by either or both of them, regardless of when it was acquired or where it is located
- The rights of each party to manage and control property, which may include buying, selling, leasing, exchanging, transferring, assigning, abandoning, using, consuming, expending, encumbering, mortgaging, creating a security interest in, or disposing of the property
- What the disposition of property will be in case of separation, divorce, death, or any other event; and
- Any other matter provided it does not violate the public policy of the state or any law that imposes a criminal penalty.
Another option is a postnuptial agreement. This is a contract similar to a premarital agreement that can be entered into by a couple after marriage. A “postnup” is a legally binding document that outlines financial ownership and details how marital assets, including business assets, will be divided in the event of a divorce. It can be used to protect the interests of both spouses, dictate how assets and debts will be distributed, and address legal issues that would arise in the event of a divorce or the death of either party.
Requirements for a Valid Prenup or Postnup
For a prenuptial or postnuptial agreement to be valid and enforceable in Florida, it must be in writing, signed by both parties and notarized. It must be entered freely and willingly, without coercion or fraud. Complete financial disclosure must be made by both parties, including all income, assets, property, and debts. The agreement must be fair to both parties, or it may not be upheld in court.
Why You Need an Experienced Orlando Divorce and Property Division Attorney
When business assets are included in marital property, it is important to consult with an experienced lawyer if you are planning to marry, are already married, or are facing a divorce. Many complex factors play a role in the equitable distribution of marital assets and debts under Florida law. At The Law Office of Erin Morse, we can assist you with a prenuptial or postnuptial agreement to safeguard your business assets. If you are dissolving your marriage, we can protect your interests and guide you skillfully through the process. Contact us at (407) 743-6059.