Jointly-Owned Businesses and Divorce

March 7, 2024 TRIWriter

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.

California Divorce, Mediation, Property Division, Property Division

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

February 23, 2024 TRIWriter

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.

California Divorce

Can In-law Gifts and Support be Considered During my California Divorce?

June 8, 2022 TRIWriter

Divorce can be devastating on multiple levels—especially financially. Getting through the process and back on your feet can take time. In this situation, it’s not uncommon for family members to help out by providing extra funds. Depending on the circumstances, someone’s family support could be a temporary measure or ongoing. Additionally, some family “gifts” operate more like recurring income. If you or your ex are getting supplemental financial assistance from family, you will want to know: Can in-law gifts and support be considered during my California divorce? Continue reading →

California Divorce, Uncategorized

What is Community Property?

February 22, 2022 Judy Burger

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 →

California Divorce

Separate Bank Accounts Are Not Always Separate Property

November 11, 2019 Judy Burger

Before marrying Jaxson, Taylor was a successful professional with a healthy bank account, a new car, and a comfortable bungalow in a nice neighborhood. Jaxson’s career was not quite as successful, and he was unlikely to earn as much as Taylor. So, Taylor and Grayson decided to maintain separate bank accounts to protect her finances. Six years later, Taylor learned the hard way that separate bank accounts are not always separate property in a community property state like California.

Understanding Separate Property

The general rule of thumb is that property brought into a marriage is usually the separate property of the party who brought it. Property acquired and income earned during the marriage generally are considered marital property, which means both parties own it.

With Taylor and Jaxson, Taylor made roughly $250,000 annually while Jaxson’s yearly income hovered around $100,000 per year. The couple together earned about $350,000 every year. No matter where this money was deposited, it became part of their marital estate.

There are exceptions to these rules. That’s why we can’t stress enough that you need to consult an attorney who has experience with property division in California divorces.

Where Taylor Went Wrong

It was undisputed that Taylor brought more assets into the marriage than Jaxson. She tried to keep her financial assets separate from Jaxson’s.

However, most of the income she earned after their marriage is community property. The fact that the income went directly to her separate account may not matter. As noted above, income earned during a marriage is considered the property of both spouses.

A prenuptial agreement could have attempted to maintain a separate property status on income earned during the marriage. Taylor could also consult an experienced divorce attorney as soon as she thinks divorce is in their future.

Also, Taylor and Jaxson sparred over how much money she had accumulated before they were wed. The money Taylor earned prior to marrying Jaxson was in her separate bank account, but post-wedding income had been deposited to this account also. Taylor could produce copies of her bank statements to prove how much was in her bank account before she married.

Determining Separate Property in a Divorce Isn’t Always Easy

Please call us at 415-293-8314 to discuss your case. The attorneys at the Law Offices of Judy L. Burger assist clients with divorce matters in San Francisco, Beverly Hills, Marin County, Santa Barbara, Ventura/Oxnard, San Jose, Gold River (Sacramento), and surrounding communities.

California Divorce

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

October 16, 2019 Judy Burger

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.

California Divorce

Dividing the Family Business: To Feud or Not to Feud

August 28, 2019 Judy L. Burger Leave a comment

Some consider family business to be the backbone of our economy. In fact, they comprise over 60% of our nation’s employment and 78% of new job creation. Studies have also shown that a business controlled by a family may exist longer than companies that are not owned and run by a family. The divorce of an owner may threaten that longevity. With the right processes and paperwork in place, dividing the family business doesn’t have to lead to a family feud.

Pre-Marriage Planning

This is the best place to start protecting a family business but is often overlooked. A strong prenuptial agreement may address the issue of business ownership, especially if the family business predates the relationship. A family business that starts during the marriage may be a little tougher to divide.

Valuing the Family Business

Usually, the parties need to know how much the business is worth before negotiating their settlement. The parties first may need to determine whether the business is community or separate property. If the business is separate property, did it increase in value during the marriage? The judge will need to know about the assets, accounts receivables, debts, and more. If the business itself or any increase in value during the marriage is counted as community property, courts and attorneys may calculate the value of the family business through:

Pereira accounting often used when the business increases in value due to the non-owner spouse’s efforts.
Van Camp accounting typically used when an increase is due to the economy or the business itself.

After the nature and value of the property are established, the parties may move toward settlement.

Negotiating the Divorce Settlement

The parties may decide to address the family business assets in several ways, including:

Buy-out. One spouse buys the other spouse’s interest in the business.
Sale. The parties sell their business interests and split the proceeds in a mutually agreeable way.
Working together. If the couple both worked at the family business, they might agree to continue working together.

The very nature of the family business may make negotiating even more emotional and stressful. Having a California divorce lawyer by your side can help.

It’s Complicated.

The attorneys at the Law Offices of Judy L. Burger are experienced at all phases of divorce proceedings, including business valuation. 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.

California Divorce

Property Division in a Community Property State (Like California)

July 26, 2019 Judy L. Burger Leave a comment

When Julie and Jackson married, they were both in their early 30s. Both were successional professionals who had lived on their own for years. After an 8-year marriage, they decided to divorce. Then the fun began – each had brought assets and debt into the marriage. Together, they had continued buying real estate, art, books, automobiles, and household goods. Their attorneys advised them of how property division works in community property state like California. Of course, they had never given it much thought until their divorce. Julie and Jackson were not sure whether their belongings were community property or not.

State Laws on Property Division

Each state in the United States has its own divorce laws, including laws about dividing the divorcing couple’s assets and debts. There are two primary ways to split marital property:

Equitable Distribution. Most states follow this type of property division. Courts grant marital assets to the parties as a fair and equitable distribution.
Community Property. A few states use the community property system. It is assumed that the spouses have equal interests in the marital property. Assets – and debts – may be split equally between the parties.

States even differ in the way they hand equitable distribution and community property. That’s why it is important to understand the laws of your state.

How Community Property Works in California

Deciding what is ‘property’ may be the first step in a divorce. Generally, property is anything that can be bought or sold or anything that has value. For example, Julie and Jackson own a house and each has a 401(k) plan. The house can be bought or sold, and the 401(k) plans have value. Therefore, the house and 401(k) plans are property that will be divided as part of the divorce settlement. A couple may negotiate a marital settlement agreement that splits their property to their satisfaction. Even so, it’s a good idea to have an experienced divorce attorney help. It’s not always easy to figure out what is property, community, or otherwise. If the parties are unable to reach an agreement, a court will divide their property based on California community property laws. According to California Family Code, courts generally start with the presumption that the couple’s community property will be divided equally. However, courts may weigh in on whether an asset is separate or community property. Also, the court may award more than 50% of the assets to one spouse based on “economic circumstances.” When one party commits domestic violence or misappropriates funds, courts also have the discretion to award more assets to the innocent spouse.

Community Property Division Is Not Always Easy.

Finding assets and determining their value, as well as whether the asset is separate property or community property, requires deep knowledge of California divorce laws. 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.

California Divorce

When Your Spouse Has Multiple Residences

June 26, 2019 Judy L. Burger Leave a comment

Larry and Gina married in Texas but lived in several states during their 28-year marriage. In fact, they still jointly owned houses in Texas, Pennsylvania, and Illinois. The couple enjoyed the extra income from renting the properties and hoped to retire to one of the properties one day. When Larry decided to file for divorce, he was living in California while Gina still lived in Illinois. He wasn’t sure how to handle a divorce when he and his spouse have multiple residences, in multiple states. This sticky situation arises more frequently than you might imagine.

Residents of California

To file for divorce in California, you must meet the following residency requirements:

You must have lived in California for the last 6 months; AND
You also must have lived in the county where you plan to file for at least the last 3 months.

Notice that only the person filing the divorce is held to these residency requirements. Problems occur when one spouse lives out of state or the couple own property in more than one state. However, filing the divorce petition is only the first step in the process. At some point, the parties will have to consider how to divide property that is not located in California.

Property Outside of California

California courts typically do not have the power to control property located in other jurisdictions. While the judge can make decisions about a divorce case filed in California, it may not have the power to divide out-of-state property. This situation is called a divisible divorce. It may be necessary to hire attorneys practicing in states where the other property is located to handle property division.

Divorce When Your Spouse Has Multiple Residences Can Get Complicated

You may have to give careful consideration about the best jurisdiction in which to file your divorce. Discuss your options with an experienced divorce attorney as soon as possible. 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.

California Divorce

What to Do When Your Royalties Last Longer Than Your Marriage

April 23, 2019 Judy L. Burger Leave a comment

Joyce, a successful singer/songwriter, recently married her high school sweetheart. Aspiring novelist Kristen and her agent have been married for eight years. And Jack has spent countless hours in his garage workshop honing his creations hoping for a big payoff someday with the help of his wife of eleven years. Each of these people may find themselves facing a tricky issue if they decide to divorce – what to do with the royalties earned from their creative works or inventions.

Dividing Property in a Divorce

California is one of nine states that use community property as the basis for property division. This means that property and debts obtained during a marriage are presumed to be owned 50/50. Splitting a bank account between two people is fairly easy. However, dividing less tangible assets – like royalties – typically is more difficult.

Royalties, as Property

A royalty is a sum of money paid to another person in exchange for using their property. Royalties may be paid to use someone’s:

Music,
Art and photographs,
Books, short stories, and other types of writing,
Minerals (sometimes these are called mineral rights instead of royalties), and
Items that are patented or copyrighted.

An item that generates royalties is an asset, as is the income generated. In fact, royalties typically are reported as business income.

Dividing Royalties

Property division can be a major part of a divorce case. A couple’s assets generally are separate property, community property, or commingled. How royalties are split may depend on when a royalty-producing work was:

Created – Was it before or after the wedding?
Patented – Was the invention developed during the marriage with contributions from the spouse.
Managed – Did the spouse contribute to the work’s success during the marriage.

Generally, work product or inventions created or developed during a marriage are community property. If the work was done prior to the marriage, but the spouse contributed to its success in some way, royalties could be split. Finally, an invention created during a marriage but not patented until after the marriage may still generate income for the ex-spouse.

A divorcing couple can certainly address royalty issues when negotiating their marital settlement:

Estimate the current and future value of an asset, then assign percentages to each party.
Swap ownership and royalty rights for property of equal value. For example, one spouse might keep 100% of a music portfolio and give the other spouse 100% of the Malibu beach house.
Agree on a split of ownership and royalty rights. This can even be done in a way that slowly phases out one spouse.

Complicated divorces involving royalty-producing assets typically involve more than state divorce laws.

Royalties May be a Double-Edged Sword.

They are an undeniably important asset and a potential source of income. The spouse who produces the intellectual property or work of art may want to keep all the royalties. However, that person’s spouse may be entitled to a percentage.

Judy Burger is a California Certified Family Law Specialist, and founder of the Law Offices of Judy L. Burger. She uses her extensive experience with business-related valuations to help clients with business and royalty properties. 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.