A large aspect of divorce is dividing up shared assets, but what happens when you and your spouse share an LLC? Maybe you own the business, but your spouse has contributed financially to it. How do you divide a business that you and your spouse share?
Dividing your marital property during a divorce is already complicated on its own. Now you have to worry about losing your business and all that you’ve worked toward. It’s in your best interest to consult with a Miami divorce lawyer to ensure that your LLC is protected throughout the divorce process.
What is an LLC?
A limited liability company (LLC) is a type of business that protects its owners from personal liability. There are several types of LLCs, such as a single-member, general partnership, or family limited partnership LLC.
As a business owner, you’ve probably heard to separate your job from your home life. That’s usually easier said than done. Many spouses start a family business together. Other times, one spouse might have an LLC before getting married, and then their spouse starts helping with the business.
Owning a business is hard work, but it can reap great benefits. Unfortunately, owning an LLC with your spouse can lead to many complications if your marriage ends with divorce.
How is Property Divided in a Divorce in Florida?
In terms of divorce, Florida is an equitable distribution state, which means that couples must divide their property as equally as possible when going through a divorce. Property in a divorce is separated into two categories: marital and non-marital.
Marital property is any property or other assets acquired during the marriage. Assets are considered marital property regardless of who bought the property or whose name is on it. Some examples of this include physical property, retirement benefits, insurance, or worker’s compensation accrued during the marriage.
Meanwhile, non-marital property includes any assets a person owned or acquired before marriage and is their personal responsibility. For example, if you owned a house before getting married and you never added your spouse to the title of the house, the house is considered yours, and it’s non-marital property. Non-marital property is not included in equitable distribution, so, in this example, you would keep the house after you get divorced.
Is My LLC Marital or Non-Marital Property?
There are many factors that determine whether your LLC is marital or non-marital. Some common factors include when you created your LLC and whether your spouse contributed to your LLC.
It’s a common misconception that if limited liability companies are created before marriage, then the business is automatically non-marital. Even if your LLC was created before you got married, it could be considered a marital asset if your spouse invested in the business.
Every situation is different, but a divorce lawyer can help you determine whether or not your LLC is marital property.
Protecting Your LLC in Divorce
Going through a divorce doesn’t mean that your business has to end. Here are some ways you can protect the business structure of your LLC during a divorce case:
A prenuptial agreement lists and separates assets from one spouse to the other. The purpose of this is to protect your personal assets in the event of a divorce. You can use a prenuptial agreement to define your LLC as separate property in the operating agreement, which will protect your ownership of your membership interest in the LLC.
A postnuptial agreement is similar to a prenuptial agreement, but you and your spouse create it after you get married. This agreement defines which spouse owns specific assets in case your marriage ends with a divorce.
Each partner must agree to the arrangements of the postnuptial agreement for it to be finalized.
Negotiate Other Assets for Ownership Interest
While dividing your property in a divorce, you can negotiate various assets. So if your LLC is considered marital property, you might be able to negotiate ownership interest for other marital assets. Of course, your spouse has to agree to the negotiation.
For example, you could ask for full ownership of your LLC, and in return, your spouse would receive another asset, such as the house or the car.
Protect Your LLC in a Divorce
No matter what situation you’re in, divorce is taxing. If you’re business partners with your spouse, dividing your business and membership interests will become even more difficult.
You might consider consulting a Miami family law attorney to help you protect your business interests, so you don’t have to give up on business ownership or lose assets.