Guest Columnist Catherine W. Real - Tampa Bay Business Journal - May 26, 2000

Hopes and fears Prepare to stave off impact of divorce on business

Just as wise people prepare for the future of their families through estate planning, smart business owners should plan for the possibility of divorce -- either their own or that of a partner.

Look at the statistical probability. Fifty-two percent of all marriages in Florida end in divorce. Hillsborough County's divorce rate matches that of the state's.

The divorce rates of other west central Florida counties are slightly higher. Pasco County's is 62 percent, Polk County's is 64 percent and Pinellas County has a 56- percent divorce rate.

How would you like your partner's ex to be a shareholder?

Here are a few of the guidelines for protecting your practice or corporation from the ravages of divorce.

Prenuptial agreements

Under Florida law, if a person's business -- even if owned before the marriage -- increases in value during the marriage, that person's spouse may be entitled to half of the increase in value. Depending on business conditions at the time a divorce occurs, it could be a financial disaster to have to buy out the spouse.

What can be done?

• Obtain a valuation of the business.
• Have a prenuptial agreement prepared in accordance with the laws of the state of Florida that clearly sets out that value and in which the spouse waives any interest in that business or its increased value during the marriage.

Post-nuptial agreements

As the name implies, this kind of agreement is made after a couple is married. It is a good time to draw up a post-nuptial agreement if:

• One spouse starts a business or enters a corporate partnership or a legal or medical practice during the marriage,
• One spouse's premarital money is invested in the new business created during the marriage, or
• A marriage is in trouble but not yet over.

Getting the financial details settled may give the couple a chance to work exclusively on emotional issues.

What can be done?

• Have a post-nuptial agreement prepared in accordance with the laws of the state of Florida that clearly sets out what will happen to the assets in the event of a divorce.

Selection of jurisdiction

Florida is an equitable distribution state. This means the value of all marital assets is usually split between the spouses on a 50-50 basis. A marital asset is anything acquired by the spouses during the course of the marriage, regardless of whose name is on the title. This includes businesses created during the marriage.

Other states have different rules for defining, valuing and dividing marital assets. Does this mean that one spouse can relocate the family to another state or other jurisdiction with more favorable property distribution divorce rules?

Yes, I've seen it happen.

In summary

The majority of you who read this column will ignore this advice.

Why?

It is not the romantic thing to do. It may send a message to your fiancee or spouse that you do not trust him or her.

Yet the recognition of the statistical probability of divorce may be the "cold water in the face" prompts people to do some serious divorce planning just in case.

Catherine W. Real is a family law attorney. Her firm is at 2110 W. Platt St., Tampa 33606. She can be reached at (813) 251-6705. For information on family law issues, access http://www.law-family.com.