What Happens To The Family Business During Divorce?
Regardless of whether you started your business before you were married or afterwards, you likely were not thinking of divorce at the time. Now, if you are considering ending your marriage or have already started the process, you may not be thinking about how divorce will affect it. Truthfully, your business is probably one of the largest you and your spouse own and so, it may be divided during divorce. Below, our Campbell property division lawyer explains more.
Community Property Law in California
California is a community property state. This means that generally speaking, property that is acquired during the marriage by either spouse is presumed to be owned equally by both spouses. This includes your business. Even if you started your business before you were married, there is still a good chance it is considered marital property or there is a partial marital interest in the business. For example, if you commingled the profits of the business with your personal finances, or you used the profits to contribute to the household, the business is likely going to be considered marital property and therefore, subject to division.
Buying Out Your Spouse
If you wish to keep your business, you can propose buying your spouse out of their share. You will need to hire an appraiser who can value the business, and then pay your spouse the value of their amount. If you do not have the funds available to pay your spouse actual money, you may agree to an exchange of assets. For example, you may agree to keep the business but relinquish the family home to your spouse.
Selling the Business
Perhaps you want an entirely fresh start after divorce. Maybe you want to start a business that is even bigger and better than what you have now. Whatever the reason, selling the business may be the best option for you. You will still have to hire an appraiser to value the business before you sell. Once the business is sold, you and your spouse then split the proceeds.
Co-Own the Business
If you and your spouse are fairly amicable once the divorce is final, you may want to continue co-owning the business with your spouse. This is often practical when couples ran the business together when they were married, and when both parties are willing to remain cooperative with each other. The benefits of co-owning the business is that you do not need to go through the appraisal process and each of you simply retains your shares of the business.
In all of the above, experts are usually necessary to provide the parties with the information required to value the business. This is often the starting point to be able to have meaningful settlement discussions on the issue of a dividing or allocating business interests in divorce.
Our Property Division Lawyers in Campbell Can Advise on Your Case
If you have a business and are getting a divorce, it is critical that you know how one will affect the other. At Hepner & Pagan, LLP, our Campbell property division lawyers can help you obtain an accurate valuation of your business and help you determine which option is right for you. Call us now at 408-429-8336 or contact us online to schedule a consultation and to learn more about how we can help.