A divorce is draining on many resources, especially time, energy and emotions. If the property division will include a family-run business, careful planning is required in order to avoid unpleasant financial repercussions. Florida residents who own a small business have reasons to be concerned over how the divorce will impact their future.
Small business owners make up most of the successful enterprises across the country. As such, those who devised the tax codes have taken steps to ensure that these companies are taxed appropriately. However, the recent changes to the tax code may have many owners worrying about how to avoid possible tax penalties. Determining the accurate value of the business requires that allowable exemptions will not lead to a higher tax rate or that assets are not double valued for support payments. In many cases, it is difficult to separate personal income from business assets.
In addition to determining the company’s current worth, it is prudent to ensure that possible tax consequences are taken into consideration when working on a settlement agreement. It’s possible that property purchased for use in the business may be transferred to a spouse who will convert it to personal use, and this may lead to a tax recapture that could affect future earnings. In addition, spouses who need to set up support payments may elect to use life insurance agreements that will become part of the divorce settlement.
A divorce that involves a business requires more time, planning and finesse than a straightforward proceeding. Florida residents may find that they will benefit from the assistance of financial advisers who are experienced in helping determine how the property division will impact the future of the company. Regardless of one’s particular circumstances, a divorce deeply affects all aspects of life; therefore, those who are preparing for a divorce may be best served by consulting with an experienced family law attorney to reach the best possible solutions.