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Can an LLC Protect You During Divorce?

Are you getting divorced? Are you worried about protecting your limited liability company (LLC) in the divorce process?

Uncertainty over how a divorce can affect ownership of a company can cause a great deal of concern for those who have spent money and years building their LLC from the ground up. While you can use your LLC to protect your business assets during a divorce, there are a few key things you need to know. An experienced Miami, Florida, divorce attorney can help you through the process of protecting your limited liability company.

How Marital Assets are Divided in the State of Florida

Understanding how property is divided in a divorce is essential to protect your business ownership. Florida is an equitable distribution state. This means marital assets and personal property that are gained during the marriage are equitably split between spouses. Non-marital property, on the other hand, is personal and business assets obtained before marriage inherited during marriage, or explicitly excluded as marital assets in a prenuptial agreement.

Depending on the situation, an LLC can be regarded as marital property, especially if it is a family business. Even if an LLC was formed before marriage, if both spouses contributed financially to the LLC during the marriage it can be considered marital property and could be subject to equitable property division. 

A skilled Miami divorce attorney can help prevent your LLC from being deemed marital property in the divorce decree, or they can help negotiate other marital assets so you can keep full ownership interest over your business. 

An LLC may not be regarded as marital property if it was started before marriage as long as marital assets were not used to fund the business during the marriage and no marital labor was used during the marriage to keep the LLC going.

Some spouses who want a cut of the pie may say that your finances were so intermingled during the marriage that they have a stake in your business interests. A court of law may agree with them because finances become so entwined in a marriage. There are ways to protect your LLC and your business assets during a divorce, and hiring an experienced divorce lawyer can help you do that.

How an LLC Can Protect You During a Divorce

An LLC is a legal entity separate from a single person. An LLC can own assets and debts. Even if you started the business yourself, an LLC is a separate entity. However, your ex-spouse can have an ownership interest in the LLC if marital assets were used at any point during the marriage to aid the business. 

The only way to truly protect your LLC is through a prenuptial agreement, a postnuptial agreement, or by revising your LLC’s operating agreement. 

An LLC Operating Agreement Can Help Protect Your Business in a Divorce 

By creating an LLC and a solid operating agreement, you are giving your company a legal identity that is distinct from your own and protecting it from being considered a marital asset.

However, merely incorporating your business is not enough to keep the LLC from being considered a marital asset in a divorce. If the company was founded during the marriage, or if financial assets from the marriage were used to fund the business, the LLC would effectively be regarded as marital property.

In order to protect your LLC in a divorce case, you must establish yourself as the only owner of your company and make sure that the operating agreement for the company expressly states that your spouse does not have an ownership or membership interest in the company so that the LLC cannot be transferred in the event of a divorce. 

If marital assets or funds were used to fund your business, a properly structured operating agreement is the only legal tool you can use to protect it from equitable distribution.

Divorces are often messy and rarely predictable. It would be regrettable if your spouse argues a claim in your LLC because they offered financial assistance while you were both happily married. You can protect your LLC and preserve your business assets with the help of an experienced divorce attorney well-versed in Florida law.


Provided by:

Vanessa Vasquez and Kristina Wilson