California is a community property state. So, in a divorce, courts divide assets and property between married spouses at a 50-50 split. You may be a business owner concerned about your rights in maintaining business ownership or the assets and value therein, especially if you have poured significant time and effort into your company. It is also not uncommon for a business owner to co-own their business with their spouse. Whatever your situation, know that there are many factors that affect how your business will look after the dust settles post-divorce.
- The date you purchased the business – Whether you started or purchased the business prior to or during the marriage may affect its status in your divorce.
- Funds used – This includes whether you used marital funds to start your business and ways in which you used them.
- Financial and personal contributions – Courts will factor in the extent to which each spouse contributed to the business.
Once the various assets receive their status as marital or separate, your business will need to be valued to ensure the accurate distribution of fair assets and for the records of the divorce itself.
What about after the divorce?
If you wish, you may opt to buy out your ex-spouse of their share; you may find that running a business with them post-divorce could hinder the business’s chance of success. A potentially mutually beneficial solution, though, would be to sell the business and divide the assets accordingly. And, finally, some ex-spouses may find that they get along well enough as co-owners and continue running their company together. Whatever your case, be sure that you have the right legal support and protection before moving forward.