A divorce is a challenging process for many reasons. While not as important as child custody, one of the most difficult aspects can be determining how the marital property is going to be divided. Owning a business can make things all the more complex. We can help our clients figure out how to handle their business situation through the divorce process. It’s important to understand how the business will be looked at through the legal framework. Whether the business is seen as separate property or communal property will determine if and how the business is divided. You’ll want to understand just how the legal process will evaluate your business in Anaheim, CA, and we can help you through each aspect of the process.
One of the first things that will be considered about your business is its history. For instance, if the business was started and doing well before the marriage, it stands a better chance of not being considered communal property. However, if various business registrations and contracts exist in both spouses’ names, then both spouses can make a claim to some level of ownership in the business.
A significant element of how the business will be considered is the level of involvement from both spouses in the business. For instance, if your spouse did regular work for the business, held a title, was on the payroll, or even had business cards, those things will be factors in their favor for making a claim on the business. However, even if they did not have a consistent role to play, if they did things that made it easier for you to grow your business, such as taking on greater domestic burdens, your spouse may argue for some right to a part of the business. So, it’s important to have clear records regarding your spouse’s role and involvement with the business.
A valuation of the business will be necessary if the business needs to be divided. It’s important to recognize that a judge may see the valuation of the business as only a starting point for the division. For instance, if the judge decides a buy-out is necessary, then future revenue from the business may be taken into consideration. This means that the spouse who is being bought out may make a claim to a share of the profits they would have had access to if they remained a part of the business.
When it comes to dividing your business in a divorce, it’s important for you to decide what it is that you want to do with the business and how it will affect your personal finances in the divorce. There are options that may keep the business operational. However, if you no longer wish to keep the business, then there are options for that as well. Some of the tactics for dividing a business include:
A: How a business is handled in a divorce depends on a variety of factors, primarily its marital property status. If the business was started and thriving before the marriage, it might be considered separate property and not community property. However, if it was started after the marriage, it will likely be considered community property and subject to property division. Also, even if the property is separate, the business may still be considered something your spouse should benefit from if they contributed to its growth.
A: Dividing a business can be a tricky process. It’s not like you can easily just split it in half, as a business usually needs all assets to function. If you can no longer keep the business running through the divorce, it will most likely need to be sold or closed, and the assets sold off. Then the proceeds would be split. If you wish to keep the business running, two options are co-ownership or a buyout of the other spouse.
A: This depends on how the company is categorized. If it is determined to be community property, then your spouse will be entitled to half the company or at least half of the valuation of the company. If it is determined to be separate property, then your spouse may not be entitled to half but may be entitled to a portion of the value based on whether or not your spouse can be seen as contributing to the company’s present valuation.
A: How a business is handled during a divorce can be complex and influenced by several different aspects of how the business is both legally registered and how it is managed. Some of the more prominent factors are:
We understand that your business is something you’ve put your time, effort, and care into. Whether you want to keep the business through the divorce or find the most effective way to part with it, we can help you assess and manage the process. We can help you to seek fair treatment regarding what you’ve built. If you have a business and are faced with a divorce, be sure to contact us today at Moranda Law Firm, APC, so we can help you understand all your options.