Jointly-Owned Businesses and Divorce
California Divorce, Property Division

Jointly-Owned Businesses and Divorce

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.

 

What Happens If One Party Wants to Keep the Family Residence?
California Divorce, Mediation, Property Division, Property Division

What Happens If One Party Wants to Keep the Family Residence?

Separation and divorce present numerous challenges to both parties. One of the most complex and emotional issues is dividing property. When both spouses have an attachment to the family home, this debate can become heated and fractional. What if one party wants to keep the family residence after a divorce? Or what if both parties wish to keep it and live in it?

California Family Law Specialist Judy L. Burger is well-experienced in Property Division matters relating to divorce. She can work with various specialists to determine the best course of action and your legal rights. Her team can also represent you in property division hearings and other divorce proceedings in the Family Courts when a family residence is in question.

California Property Division Law

California law follows the doctrine of community property in that any debts or assets owned by a married couple are jointly owned (community property). Therefore, each spouse has an equal interest. In a divorce, community property should then be divided 50/50 between the spouses. However, the family home may or may not be considered community property under state law.

The home may be considered community property if:

  • The home was purchased with earnings from both spouses.
  • Both spouses obtained a mortgage for the home while married.
  • Both spouses contributed earnings to pay the mortgage and/or upkeep of the home.

The family residence may be considered separate property if:

  • One spouse already owned the home before marriage.
  • The home was gifted to one spouse before or during the marriage.
  • Only one spouse provided for the mortgage or upkeep of the home.

However, separate and community property can easily become commingled in a marriage. Over time, a married couple can acquire a community interest in the home through numerous actions and investments.

Conversely, other parties can acquire an interest in the home as well. Any mortgage lender you owe will hold an interest. If you jointly own the home with a third party, such as a family home passed down to one spouse but in another person’s name, this person has an interest and legal rights. You may have also used your home as collateral for a business loan. If so, the business in question may have an interest and rights as well.

So, Who Gets the House?

The question of who gets the family residence in a divorce is never simple. As you see above, numerous factors and scenarios can come into play. Separated or divorcing spouses have some options for settling the question:

  • Agreeing on Separate Property: The couple agrees that the home is the separate property of one spouse. This must be verified by a court order to become official.
  • Negotiating a Living Agreement: The couple can agree on who maintains ownership and lives in the house. However, any joint agreement you reach must be ordered by the court to make it official.
  • Spousal Buyout: One spouse agrees to buy out the community property interest of the other spouse. An independent appraisal is necessary and the court must agree to this arrangement.

If the couple cannot agree, the Family Court will turn to California’s property division laws to make orders. In the case of separate property, the home belongs to the spouse who owns it. When the home is declared community property, the court may order the following solutions:

  • Sell the Home: The family home is sold and the proceeds are divided equally among the parties holding an interest or according to the courts division (if any separate property interest is determined).
  • Buyout: One spouse is allowed to purchase the other’s community property interest and becomes the sole owner of the home.
  • Deferred Sale: If a couple has minor children at home, the couple may remain joint owners but allow the custodial parent to live in the home with the children. This can often make a divorce easier on younger children. After a specified time, the home is sold and the proceeds are divided.

Get Seasoned Representation for CA Property Division

Numerous factors can arise in any property division during a divorce, so you need seasoned legal representation and counsel to protect your interests. Family Law Attorney Judy L. Burger is a skilled negotiator and vigorous defender of your rights. She has the knowledge and experience in family law to handle difficult or complex property settlements on your behalf.

Contact one of our offices throughout California today to get help with difficult property division questions in a divorce.

What do You do When You Think Your Ex is Hiding Divorce Assets?
Property Division

What do You do When You Think Your Ex is Hiding Divorce Assets?

During your California divorce, you and your ex will be required to identify and disclose certain financial information to one another. Ideally, everyone will follow the rules and be honest about their assets. However, there can be situations when a party is not being financially forthcoming. If you are going through a California divorce and believe your former spouse has secret property, you need to ask: What do you do when you think your ex is hiding divorce assets? Continue reading →

How Will My Ex’s Affair Impact My Divorce?
California Divorce

How Will My Ex’s Affair Impact My Divorce?

Having a marriage end in divorce is hard under most circumstances. However, when the reason for the divorce is infidelity, what was already painful can be devastating. Processing your ex’s betrayal can be difficult, especially in the midst of your divorce case. However, it’s important to consider how their extramarital conduct may affect your case outcomes. Therefore, you need to know: How will my ex’s affair impact my divorce? Continue reading →

What is Community Property?
California Divorce, Uncategorized

What is Community Property?


When a couple goes through a divorce, one of the main issues they will face is how to divide their shared property and funds. During this process, you may hear that your marital assets are considered “community property.” Those unfamiliar with this term may be wondering, what is community property? Here is what you need to know about California divorce and community property: Continue reading →

Community Property or Separate Property How Can I Tell the Difference
California Divorce

Community Property or Separate Property: How Can I Tell the Difference?

For some couples, property division is one of – if not the – most important issue to iron out in their divorce settlement. However, when assessing your assets to see who gets what, will you be able to tell whether something is community property or separate property?

Was the property acquired during the marriage?

Most assets acquired by a married couple are considered to be community property. This includes real estate, personal property, and income “wherever situated.” For example, if a married couple living in California buys a vacation home in Hawaii, the home probably will be part of the community property estate if the couple divorce. Separate property is any asset the party acquired: before the marriage, during the marriage, if a gift or inheritance; and after the parties legally separate. Sometimes an asset brought into the marriage may become community property, depending on how the asset is treated during the marriage.

Was the property inherited?

An inheritance received by one spouse is that spouse’s separate property. However, separate property may become community property if the inheritance is commingled with community property or transmuted by the spouse who received the inheritance. For example, Claudia G. inherits $50,000 from her grandmother. The $50,000 should be Claudia’s separate property. However, she deposits the money in a joint bank account and clearly intends that her husband use it. The inheritance might be considered community property.

Did the property increase in value during the marriage?

Sometimes separate property brought into the marriage by one spouse increases in value. If the other spouse helped with the increase, a portion of the property might be considered community property.

Will the asset potentially have future earnings?

Some property may earn royalties or other payments during the marriage. Determining the current value of the asset may be hard enough. Predicting how much income the property may generate in the future is even more difficult. The way the earnings are split may depend, in part, on whether the asset is community property or separate property. If separate property, the next question may be whether the non-owning spouse contributed to the property’s success. For example, an author starts drafting a book while single. The book is published after the author gets married. The author’s spouse assisted with research, editing, and marketing the book. If the couple divorce later, is the book community property or separate property? The author brought at least the first draft into the marriage, but the new spouse contributed to the book’s success.  As with all divorce issues, however, the court will decide how to treat the property if the couple cannot reach an agreement.

Assets and Debts May Be Community Property or Separate Property

Disagreements about property division can complicate your divorce and hold up your final divorce settlement. Talk to an experienced California divorce attorney today. Please call us at (415) 293-8314 to schedule a confidential appointment with one of our attorneys. Ms. Burger is a California Certified Family Law Specialist and founder of the Law Offices of Judy L. Burger. We assist clients in California’s Northern to Central Coast, including San Francisco, Beverly Hills, Gold River, Santa Barbara, Ventura/Oxnard, and surrounding communities.
Separate Property: How to Handle Increases in Value During Marriage
California Divorce

Separate Property: How to Handle Increases in Value During Marriage

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Separate property is property that the law recognizes as owned by only one spouse in a marriage. Community property is presumed property obtained during marriage. Those short definitions make property issues sound simple, but they often are not. If you and your spouse were married for any length of time, there’s a good possibility any separate property brought into the marriage may have increased in value.

So, how does such an increase in value affect a divorce settlement?

That depends on the asset and how the asset appreciated in value.

Business Assets

Sometimes one spouse starts a business before marrying. The business is that spouse’s separate property. If the marriage ends, isn’t the business still considered separate property? Not always.

For example, Jay owned a business prior to marrying Jill. He brought the business into the marriage as separate property. However, Jill spent many hours helping him build his mom-and-pop store into a much larger retail operation. When they decide to divorce after 12 years of marriage, what right does Jill have to Jay’s business assets?

Community labor is worth something. Both Jay and Jill’s efforts, during marriage, played a big part in the store’s success. Jill probably is not entitled to own part of the business. However, she is entitled to an interest in the business because the separate property increased in value due to Jay and Jill’s efforts during marriage.

Acquired Assets

Property purchased during a marriage is generally considered to be community property. However, gifts and inheritances that one spouse receives are the separate property of that spouse. It’s possible, though that a spouse could receive an inheritance that increases in value. The increase may become community property.

Gloria owned a house prior to marriage. Three years after marriage to Bob, Gloria put Bob on the deed. When Gloria and Bob divorce, Bob wants half the equity in the house. Bob may have a community interest in the home.

Calculating the Community Increase

Once it’s determined that the increased value of separate property is community property, how is the increase calculated?

Divorce courts and attorneys may use formulas based on prior divorce cases to figure out property division.

  • Moore/Marsden calculations are sometimes used to calculate how much of a home’s value became community property during a marriage. This formula uses separate property appreciation amounts, total principal reduction, and comparisons between purchase price and current value.
  • Pereira accounting may be used to figure out how community funds and community labor enhanced the value of separate property. It’s typically used when the business appreciates due to the efforts of the spouse who doesn’t own the business.
  • Van Camp accounting typically is used when a business value increases due to the business or to economic factors.

Pereira and Van Camp are two family law cases in which the courts had to decide division of property that increased in value.

Learn More About Separate and Community Property

The attorneys at the Law Offices of Judy L. Burger are experienced at all phases of divorce proceedings. Call us at 415-293-8314 to schedule a private appointment or visit our website. We maintain offices in Marin County, San Francisco, Santa Barbara, Ventura/Oxnard, San Jose, Gold River (Sacramento), and surrounding communities. Our Beverly Hills office will be opening soon.

Insurance Settlement and Your Divorce
California Divorce

Insurance Settlements and Your Divorce

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Divorce can be complex. Untangling finances, figuring out what to do for the children, and determining what’s community property can take time. Adding the complication of an insurance settlement to a divorce certainly doesn’t help.

The Law on Personal Injury Settlements

California law addresses insurance settlements in California Family Code 780 and 2603. While some of the language is vague, the law does address whether settlements are separate or community property.

Injuries During Marriage.

When a personal injury cause of action – the event that led to the injury – occurs during a marriage, then the insurance settlement for those injuries is considered community property. As such, the settlement is split 50-50 between the parties, even if only one party was injured.

Sometimes parties divorce after the accident, but before the insurance settlement is received. The community property/separate property determination is made based on when the injury occurred, not when the settlement is received.

Injuries Incurred Outside the Marriage.

If an injury occurred before parties were married, or after they start living separately, then the insurance settlement belongs only to the injured party. The term “living separately” does not necessarily mean “date of separation.”

For example, an unmarried person is seriously injured in a car accident, then later marries. The cause of action for the personal injury occurred before the marriage. Any insurance settlement is the property of the injured party only.

Reimbursement for Expenses

One exception to the separate property case noted above involves reimbursement for expenses paid by the non-injured spouse. Family Code 781(b) states that expenses paid by the non-injured person from separate property or community property may be reimbursed.

For example, if one spouse may be injured in an accident before the marriage. After the marriage takes place, the uninjured spouse pays expenses that relate to the injuries suffered in the accident. The uninjured spouse may be able to recover at least part of their expenses from the insurance settlement received by the injured spouse.

Learn More About Insurance Settlements and Your Divorce.

Judy Burger is a California Certified Family Law Specialist, and founder of the Law Offices of Judy L. Burger. Please call our offices at 415-293-8314 to set up an appointment with one of our attorneys. We assist clients along the Northern to Central California Coast.
Keeping Property Separate During a Marriage
California Divorce

Keeping Property Separate During a Marriage

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Marriage is the ultimate partnership. But it’s more than just two people in love forming a union of two souls. Each person usually brings along property, money, and personal possessions. At least some of that property is considered ‘separate property.’ As a marriage progresses, couples also acquire property, some of which might be intended to be the property of only one member of the couple. It’s important to understand about keeping property separate during a marriage.

Community Property.

California is a community property state, meaning that property acquired by a couple is considered the property of both partners. The same principle applies to debt, with each partner usually being held accountable for debt owed by either partner.

Separate Property?

Sometimes parties will bring separate property into a marriage or domestic partnership. During the marriage, gifts or inheritance to one partner are also considered separate property, meaning it’s the property of the person who received the gift or inheritance.

Property and debts acquired after the date you and your partner enter into a separation is also considered separate property.

Commingling of Property

As you might imagine, determining whether something is separate property or community property can be difficult. For example, perhaps one spouse uses their own money to buy a house before marrying. However, during the marriage, mortgage payments were made using money earned by both spouses. Equity built up during the marriage is community property, but the down payment on the house is still separate property.

Keeping it Separate.

Fortunately, there are ways to maintain separate property during a marriage:

  • Be careful titling financial accounts and real property. For example, don’t automatically add your new spouse’s name to property you obtained before your marriage.
  • Income and dividends from separate property should be kept separate.
  • Use separate income to maintain separate property.
  • Don’t commingle inherited property and gifts.
  • Maintain accurate records of what property was acquired before and during the marriage.

Final Thoughts.

When spouses own property in more than one state, or have lived and worked in a state other than California during their marriage, the separate property/ community property debate becomes more complex.

To discuss how to handle separate and community property issues, please call us at 415-293-8314. The attorneys at the Law Offices of Judy L. Burger assist clients in San Francisco, Marin County, Santa Barbara, Ventura/Oxnard, San Jose, Gold River (Sacramento), Roseville, and surrounding communities.
Community Property FAQs
California Divorce

Community Property FAQs

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California is a community property state. Everyone says that, but what does it really mean? The following questions tackle a few of the questions you may have about community property.

When one spouse makes more money than the other, will their property still be split 50/50?

Divorcing couples negotiate an agreement called a divorce settlement. The division of the community estate is decided by the couple and their attorneys. Couples may agree to split that is not 50/50.

However, when couples are unable to agree, then the court gets involved. To arrive at a fairly equal division of assets and debts, courts may award part of the community property to one party based on economic circumstances. And, remember that income is considered community property in California.

Is an inheritance received during a marriage considered community property?

Property that is inherited by one spouse usually remains the separate property of that spouse unless one of the following two conditions occurs:

Commingling. The nature of an inheritance changes if the receiving spouse mixes, or commingles, the inheritance with community property.

For example, if Rosie keeps the $120,000 cash she received from her grandmother’s estate in an account that only she owns, her husband John generally can’t take it in the divorce. If Rosie instead deposits the cash into the joint account she has with John, the inheritance is now community property.

Transmutation. This occurs when the spouse who received the inheritance takes action that shows an intent to make the inheritance community property.

Using the example above, Rosie receives the $120,000 inheritance and puts it in a separate account. However, she later uses the money to buy a home that she titles in both her and her spouse’s names. She has transmuted the inheritance from separate property to community property.

A spouse who has commingled or transmuted separate property can request reimbursement if the separate property contribution can be traced back to its source. Rosie could ask to have her $120,000 returned, but she would have to prove that the money came from her inheritance. Keeping accurate, up-to-date records is critical.

Does community debt include a spouse’s credit card bills?

Debts incurred during a marriage are typically community debts.

For example, John uses his credit card to buy a wardrobe full of Louis Vuitton while still married to Rosie. His credit card bills are considered community debt and will have an impact on the value of the community estate. When dividing up their assets and debts, John could take the Louis Vuitton and the debt. However, creditors don’t really care about divorce settlements and may come after Rosie for payment if John defaults.

Is a house purchased by one spouse before marriage considered community property?

When spouses buy a house together using community funds, the house is community property. A house purchased by one spouse before the marriage is the separate property of that spouse.

However, the issue can become complicated if community funds were used for the mortgage or other house-related expenses. Also, the spouse may be found to have an interest in the home if the couple was married for a long period of time.

Call to learn more about community property.

It’s not always easy to understand which assets are considered community property and which ones are not. An experienced California divorce attorney can help you understand how much financial information needs to be disclosed.

Judy Burger is a California Certified Family Law Specialist, and founder of the Law Offices of Judy L. Burger. Please call our offices at 415-293-8314 to set up an appointment with one of our attorneys. We assist clients along the Northern to Central California Coast.