Navigating a divorce is challenging, especially if you are a small business owner. California is a community property state, meaning that you and your spouse share all your assets and debts, regardless of who holds the property title.
Unless your company falls under an exception, it is also a part of the marital estate. When diving property during your divorce proceedings, saving your business requires certain concessions.
Purchase your spouse’s share of the business
One way to approach keeping your business in a divorce is paying your spouse for their court-awarded shares. You may have to acquire financing to do so, but it can be worth it in the long run to maintain your livelihood.
Forfeit other marital assets
Giving up valuable holdings, such as pension or retirement accounts, vehicles, your house, or other real estate properties can replace your spouse’s share of the business, allowing you to retain 100% ownership. Working to devise a solution that benefits you both can help you keep your small business.
Obtain a business valuation by a neutral party
Relying on a court-appointed valuation of your business can leave you vulnerable. You may want to hire a third-party service to ensure a fair and accurate appraisal. When emotions run high, you want to stay level-headed with unbiased figures to guide your decisions.
When you go through a divorce, you make many decisions that affect your way of life. As an entrepreneur, keeping your business maintains your professional growth and source of income. Staying focused on your long-term goals helps you make decisions that benefit your financial health.