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Understanding Businesses & Property Division During California Divorces

The division of assets and liabilities is often the most contentious part of a divorce. When one party owns valuable assets, such as a business, it becomes even more complicated.

If you're a business owner or are married to one, understanding how the court may divide that business is essential. At Gille Kaye Law Group, PC, our attorneys can help you navigate the property division process and pursue the best outcome in your divorce.

To schedule a consultation with our team, contact us onlineor via phone at (626) 340-0955.

Businesses & Community Property in CA

California is a community property state, meaning that divorcees must divide marital assets equally.

In California, businesses started during a marriage are typically considered community property, meaning you may have to divide your business equally with your spouse. In other words, even if a business owner starts and runs a business without their spouse's assistance while married, they could effectively lose half their business to their spouse during the property division process.

The fact businesses are considered community property in many California divorces is a primary reason that many attorneys advise business owners to draft a prenuptial or postnuptial agreement detailing the business as the owner's separate property.

In most divorces involving a business that is considered marital property, both spouses hire a financial professional specializing in asset valuation to determine the business's worth. Once the spouses agree on how much the business is worth, they must distribute it equally.

At this point, you may be wondering how couples distribute businesses that courts consider marital property. You have a few options:

  • One spouse buys the other out. This is a common outcome when the business owner wants to retain full ownership of the business. They may offer up ownership of other property during property division to retain the business, or offer to pay the spouse an amount equal to half the business's value.
  • One spouse offers the other partial ownership. This could come in the form of business assets such as stocks, or by awarding one spouse control over actual business operations. This allows the business to continue operating as a single entity, although it may require the owner to give over some control.
  • The spouses split the business into two entities. This may result in two separate, smaller businesses in competition with one another, but it can be a viable option if the business was co-owned by the spouses anyway.
  • The spouses sell the business. This may be the best outcome if the owner can't afford to buy out the other spouse and doesn't want to offer them partial ownership.
  • The spouses dissolve the business. This is often a last resort for business owners, but may be necessary if the parties can't reach an agreement concerning how to divide the business.

At Gille Kaye Law Group, PC, our property division lawyers can help you defend your assets and find the best path forward in your case.

To schedule a consultation with our team, contact us onlineor via phone at (626) 340-0955.

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