It is not unusual to find limited liabilities companies (LLCs) owned by married couples in Florida. What happens if the LLC members divorce? Is it possible to separate marital interests from business interests? Keep reading to find out.
How are Assets Divided After Divorce in Florida? – The Basics
Florida is an equitable distribution state. If a couple divorces within state jurisdiction, Florida law ensures the fair division of all the assets acquired during the marriage between the former spouses.
Property acquired during the marriage is considered marital property, which is subject to equitable distribution. Non-marital property includes property acquired by the spouses before the marriage, property excluded by agreements (e.g., prenups), or property inherited during the marriage.
In most cases, marital property includes assets like:
- Real property held by both spouses
- Personal property held by both spouses
- Retirement benefits accrued during the period of marriage
- Different types of benefits paid during the marriage (e.g., workers’ compensation, insurance, pension, and social security benefits)
- Stock options
Depending on the couple’s circumstances, funds obtained in the appreciation of non-marital assets and gifts from one spouse to another may also qualify as marital property.
Determining whether an LLC is a marital property is a complex task. In such cases, it is fundamental to work with an experienced Florida attorney for a diligent assessment of all the former couple’s assets to negotiate an adequate division.
How to Identify Whether an LLC is Marital Property
A limited liability company (LLC) is an asset subject to division upon divorce. Identifying the marital or non-marital status of an LLC depends on:
- When the company was formed
- Whether both spouses contributed to the company
- Whether the spouses have invested marital assets in the company
Depending on the case’s circumstances, even an LLC formed before marriage can be considered marital property. For instance, if one of the spouses invested marital funds in the business, a court might determine the LLC is a marital asset.
Please note that divorce does not mean the automatic end of a Florida LLC. The former spouses can work with an experienced attorney to reach an agreement to preserve the business activities while protecting their interests.
How is a Florida LLC Divided During Divorce?
It is fundamental to understand that the term “equitable” division does not necessarily mean “equal” division. If a Florida LLC is considered marital property in court, it is subject to a fair division under the laws of the state.
Multiple factors may determine the division of an LLC after divorce, including:
- The amount of time the couple was married
- Each spouse’s economic situation
- The occurrence of interruptions to one spouse’s career or education
- Whether a spouse worked to advance the other’s education and profession
- The amount contributed by each spouse
- The number of contributions that enhanced the value of marital property
- The liabilities involved in the process
Legal and financial disputes between former spouses may also influence a court’s judgment.
For instance, if one of the spouses owns and operates the business without the other’s help, the court may award the business to that spouse. However, the court may award the other spouse with a greater share of the other assets, such as the marital residential property.