Divorce for Business

Orange County Divorce For Business Owners

The dissolution of your marriage can have a major impact on your business, especially your marital or community assets. While divorce is often a complex and emotional process, it can be even more so for business owners, especially if both spouses own or run the business jointly. If you want to protect your business from disruption or loss caused by your divorce, you need to consult with a divorce attorney from Kaufman Steinberg. We can guide you on the best course of legal action. You can continue reading to learn more about divorce for business owners in Orange County, California.

How Is A Business Owner Divorce Different?

In most divorce cases, separately owned properties are not divided by the court. However, if an asset is acquired or created after marriage, it can be considered a marital or community asset. Businesses are also considered an asset according to the law in California, which means the business will have to be divided between the two parties.

However, certain factors need to be considered when dividing the business assets. This includes whether the business was owned by one party prior to the marriage, whether the business is the sole source of income for one or both individuals, whether the business was inherited, and other factors.

If you were running a business before marriage and kept it separate from your married life, there is a possibility that you can keep all of your business.

What Happens When Business Owners Divorce In California?

In most property division cases, the community property or business is divided 50/50 between the divorcing couple. If you owned the business prior to marriage or it is a family business, your spouse cannot obtain a share from the business interests after the divorce. However, adding your spouse to your inherited family business and allowing them to be involved in business matters can make them entitled to a fair share in your business.

If the business has shared ownership, you and your spouse can decide which one gets to keep running the business or whether the business must be sold to obtain a fair share. In rare cases, the couple can choose to run the business jointly.

How Do I Protect My Business In A California Divorce?

You can consult a divorce attorney before filing the divorce paperwork. They can guide you on how to retain primary ownership of a business and remove responsibility from your spouse before filing for divorce. If your spouse’s involvement in the business has a connection to the business’s current success, your spouse may retain a major portion of the business.
Having your name on the registration documents can further protect your business from getting divided in divorce. Even though the judge has the final say on how the business is divided after the divorce, reaching an amicable agreement with your spouse or giving them their share of the business without selling or dividing business interests is also an option. An experienced divorce attorney from Kaufman Steinberg can help craft a favorable strategy for an Orange County divorce involving business owners.

Options For Business Division

When it is settled that the business is a separate or community property, a business valuation needs to be done so that that business can be divided between you and your spouse. The following are two common methods of assigning a business’s value.

Valuing A Business Using Assets-Based Approach

When you and your spouse share the community property or business ownership, valuation can be very complex. Most valuators in Orange County divorce cases use the method of asset-based valuation, where the business is valued based on its liabilities and assets with respect to the current market value.

This typically happens when the business undergoes liquidation. When the valuation is complete, the couples can either reach a settlement among themselves or take the issue to court for a fair division of assets.

Income-Based Approach To Business Valuation

A business can be valued with an income-based approach. This method is more complex than an assets-based approach due to the complicated differentiation of personal and business intangible assets.

The value of a business is determined by evaluating its current and future earnings. Typically in this divorce process, one spouse pays support to the other after divorce for their additional expenses that were handled through business.

What Is The Divorce Process For Business Owners?

An Orange County divorce for a business owner can get complicated. If you file for divorce without evaluating the outcome or consulting a specialized divorce attorney regarding your community property, you can lose half or more of your business interests. While it is different for some states, in California, if a business was created or acquired during the marriage, it is considered community property.

Even if your spouse does not share ownership of the business, they can still get half of the shares after the divorce. There is a possibility that the business can be granted to either one of the spouses based on the impact of their involvement in the business, the duration of the marriage, and inheritance.

If the business was started by both spouses, a third-party appraiser can value the business and submit the report to the court. The judge can make a decision based on the provided report. Any one of the spouses who want to retain full rights to the business can buy out the other by paying their share out of pocket. However, buying out your spouse from the business may be more costly than dividing the business, depending on the business valuation.

Protect Your Business By Hiring An Orange County Lawyer

A divorce attorney from Kaufman Steinberg can help you form a strategy for the property division of your community property. Orange County divorces can be complex matters for business owners, especially when there are multiple assets, including intangible assets.

As mentioned above, most businesses are valued on asset-based approaches, which means retaining assets can retain debt. Consult an experienced divorce attorney from our Orange County law firm regarding business valuation and how to prevent your business from suffering any loss due to your divorce.

“The bond that links your true family is not one of blood, but of respect and joy in each other’s life.”

– Richard Bach
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