When starting the divorce process, you may be concerned about protecting the assets you’ve worked hard to acquire. In California, property acquired during the course of a marriage is considered community property. Property acquired prior to the marriage is considered separate property. Closely held businesses are considered a divisible property during a divorce.
While some assets may be clearly defined as either community or separate property, often business ownership comes after many years of preparation and hard work and with contributions from many parties.
If you acquired your business prior to your marriage and your ownership has not required any efforts on your part, your business would be considered separate property. If you acquired your business prior to the marriage but saw no real return on it until after you were married, it could be ruled that the business, minus the separate funds you contributed to purchase it, is community property.
Basically, whether a business is community or separate property is dependent on what efforts or contributions, financial or otherwise, you or your spouse put into it and when. Your spouse will have a claim to the business if it was purchased with community funds or benefited from community efforts during the marriage. A community effort doesn’t have to mean they served in any official role, rather that they contributed it to its success by being a supportive spouse. If your business is considered community property, there are a few options for how to handle it during a divorce. You can continue to co-own the business after the divorce, buy out what portion your spouse is entitled to with other assets or by assuming more liabilities or sell the business to split the proceeds.
If it is considered a mix of community and separate property, your Los Angeles family law attorney can call on the right experts to valuate your business and can determine the interests you both have. Business ownership often comes with complicated finances as well so it is in your best interests to retain the services of a family law attorney experienced in complex property division to protect your business and your rights during your divorce.
Are you in the Los Angeles area and have questions about business ownership and divorce? Certified Family Law Specialist Mark H. Karney has experience representing high net-worth individuals and handling complex divorces involving business interests in Los Angeles County. Serving Los Angeles and surrounding areas, California family law attorney Mark H. Karney offers efficient and tenacious legal counsel. Call our office at 310-622-9434; email us at email@example.com or contact us through our online form today to schedule a free consultation.