Dividing a business during a
divorce is often a complicated task because so many variables come into play.
As with other assets in the state of California, a business is considered
in the valuation and division of community property. Community property
is defined as assets acquired or income earned by either spouse during
marriage. Separate property is defined as assets acquired prior to the
marriage, gifts inherited or received during the marriage, or items and
money earned after separation. Anything considered community property
must be equally divided among both parties in the absence of any written
agreements that state otherwise.
When determining if a business is separate or community property, several
questions must be answered, for example:
- What is the date of marriage?
- When was the business created?
- What is the source of funds for the business?
- Was there any spousal contribution to the business?
- What was the value of the business at the time of your divorce?
If you determine that the business is community property or a mix of both
separate property and community property, there are a variety of routes
you may be able to take.
- Both you and your ex-spouse can continue to jointly own the business.
- You can sell the business and divide the profits.
- One spouse can keep the business and offset half the value with other assets.
One of the more time intensive aspects of dividing business assets is determining
the value of the business. This involves the intangible value, known as
its evaluation of “goodwill”, which is based on the expectations
of the business’s future. A certified public accountant and/or business
appraiser are necessary to review the business’s books and examine
Flicker, Kerin, Kruger & Bissada LLP helps clients protect their interests
and assets when property is divided or distributed during the divorce
process. This is typically a stressful and emotionally charged time for
both parties. You will need a firm that has expertise in carefully handling
such cases. Our attorneys are skilled negotiators and will help make this
step less daunting during your divorce.
Call our Menlo Park location at (650) 289-1400 or
our San Ramon location at (925) 327-6200.