What Business Owners Should Know about Divorce

The division of marital property is one of the most complex elements of any divorce, and few things complicate the matter more than business ownership. If you own a business, there are a wide range of related issues that can affect the outcome of your divorce, which makes working closely with a dedicated California divorce attorney who has extensive experience helping business owners protect their financial rights while successfully navigating the divorce process in your best interests.

Who Owns the Business?

Even if you started the business in question on your own and dedicated yourself to it over the course of your marriage, it remains a marital asset that must be addressed in the division of your marital property while your divorce is pending. If you owned the business prior to marriage, it may be a separate asset, but there are many factors that can affect its separate nature, which can make an equal division of marital property that much more challenging.

How Are Businesses Divided in Divorce?

If you and your divorcing spouse can find a way to resolve the matter of your business in the equal division of your marital property, the court will almost certainly include your mutual decision in your divorce orders. The kinds of agreements that most divorcing couples come to in relation to business ownership include the following:

• One spouse takes their share in the business in the form of another asset, which is generally only doable when considerable assets are involved.
• One spouse buys out the other’s ownership by taking out a loan.
• One spouse buys out the other’s ownership over time.

Selling a business in order to split the value in a divorce generally is not a great option for either spouse, which makes finding another way the best course of action.

Putting a Value on the Business

When it comes to dividing a business in a California divorce, simply arriving at a valuation that both spouses can agree to can be immensely challenging, but this is far from the end of the matter. Once you have landed on a mutually acceptable value, there is often the issue of the business’s earning potential into the future to be addressed, which can become very complicated very quickly. 

Factors that can affect how much the spouse being bought out is entitled to can include all the following:

• The degree to which they were involved in the business
• Any financial resource they contributed to the business
• The degree to which marital assets were used to grow, maintain, or support the business

An Experienced California Divorce Attorney Is on Your Side

The accomplished California divorce attorneys at Miranda, Magden & Miranda, LLP, have an impressive track record of helping clients like you protect their rights as business owners throughout the divorce process. Few things make the division of marital property more complex than business ownership, so please do not wait to contact us for more information about how we can help you protect your financial rights today.