When a couple decides to end their marriage, one of the most complex issues that they may face is the division of property. This can be especially difficult when the couple owns a business together. Jointly-owned businesses in California add another layer of complexity to the divorce process. What are your options for keeping or dividing the business? How does California law impact these decisions?
Certified Family Law Specialist Judy L. Burger discusses the specific considerations that need to be taken into account during a divorce involving a jointly-owned business.
Community Property Laws in California
California is a community property state, which means that any assets acquired during the marriage are presumed community property and if found to be community property, must be divided equally between the spouses in the event of a divorce. This includes any businesses that the couple owns jointly. In California, the ownership of a business is determined by both the legal and economic interests of each party.
Legal Interest vs. Economic Interest
Legal interest refers to the ownership interest that is reflected in the legal documents of the business. Economic interest refers to the actual value of the business. In some cases, these interests may not be equal. For example, one spouse may have a greater legal interest in the business. Still, the other spouse may have contributed more to the business and may have a greater economic interest.
Valuing Jointly-Owned Businesses
In order to divide the business equally, it is important to determine the value of the business accurately. This can be a complex process and may require the assistance of a business appraiser or accountant. The appraiser will take into account the assets and liabilities of the business, as well as any future earnings potential.
Options for Dividing the Business
Once the value of jointly-owned businesses has been determined, there are several options for dividing it. One spouse may buy out the other spouse’s interest in the business. This can be done by paying the other spouse their share of the business in cash or by exchanging other assets of equal value. Another option is for the spouses to continue to co-own the business. This can be a difficult option, as it requires the spouses to continue to work together, despite the end of their marriage.
Protecting the Business
In some cases, it may be possible to protect the business from being divided during a divorce. This can be done through a prenuptial or postnuptial agreement that outlines how the business will be treated in the event of a divorce. It is important to consult with an experienced Family Law Attorney like Judy Burger to ensure that any agreements are legally enforceable.
Get Help from a Seasoned CA Family Law Attorney
Divorce can be a difficult and emotional process, especially when it involves a jointly-owned business. It is important to work with a seasoned family law attorney who can help you navigate the complexities of dividing a business during a divorce. Ending a marriage and severing a business relationship at the same time requires keen wisdom in human relationships as well as an encyclopedic knowledge of the law.
Judy Burger is a Certified Family Law Specialist who can guide you through the rocky shoals of divorce and help you with property division concerns over a jointly-owned business. She has solid working relationships with various professionals who can help her protect your interests and ensure that your rights are protected. These accountants, appraisers, business attorneys, real estate brokers, and other professionals work with her to help you get the most from any business division of property due to divorce.
Contact The Law Offices of Judy L. Burger today to learn more and schedule a consultation.
