Divorce has gotten more expensive, and residents of Florida may want to learn more about the reasons. The overall divorce rate has declined in the United States, but for couples age 50 and older, the rate has more than doubled. What does this mean for married business owners?
According to one CPA, the negative effects of a divorce for a couple who owns a business together may be formidable. It might signal the end of the business.
Often dissolution of the business results
Your spouse could want out of the business when you separate. You may owe them a large cash payment for their share, and the only way to pay them is to liquidate. “Half of everything” could cause the business to topple like a ton of bricks.
Prenuptial agreements and the smart structuring of a company may prevent this from happening to divorcing business owners. A business owner should ask the following questions long before their relationship turns sour:
• Is the spouse involved in the business with their own shares?
• How does the spouse contribute to the business?
• Did the business start before the marriage?
• What method will be used to find the value in the event of a divorce?
• Is there a buyout agreement or something in place?
The value of forensic accounting
Forensic accounting may help with high-asset divorce, especially when the couple owns a business. The forensic accountant may:
• Discern capital assets before the business formation
• Separate personal and business assets
• Determine the fair market salary
• Prepare valuations and property divisions
• Serve as an expert witness when it comes time for court
People who are getting divorced at an older age typically have higher-value assets. The dissolution of a marriage may impact an unprotected business as well as the spouses.