How business ownership can affect the divorce process

Most high asset divorces come with a greater level of challenges and complexities than average. This can especially be true in cases where one of the two spouses is a business owner. After working relentlessly for years to establish and build a fruitful and successful business, there are now most likely many questions and concerns over the impact it could potentially have on the divorce process 

Determining if the business is separate or marital property  

California is a community property state, so all marital property is typically treated as being shared equally by both spouses. Therefore, the key factor in determining whether one’s business is subject to asset division is whether it qualifies as separate or marital property. Any property owned before the marriage, including some inheritances and gifts, qualifies as separate property and is not subject to division. Marital property, on the other hand, includes any assets accumulated during the marriage.  

There are many things a court may consider when determining if a business qualifies as separate or marital property. Two of the most common and impactful are if the creation of the business took place before or during the marriage, and the level of involvement of the spouse who didn’t own the business. This level of contribution can include direct involvement with certain aspects of the business or indirect involvement by simply handling family affairs and freeing up the other spouse to better run the business.  

Determining the business’s valuation 

The estimated value of one’s business can play a critical role in many aspects of a high asset divorce besides just property division. Child support and spousal support are two areas that can be significantly affected by the amount the business is ultimately deemed to be worth. With several methods from which to choose and a substantial number of details needed, determining a business valuation can be an overwhelming task. Fortunately, an experienced attorney can carefully guide a business owner through all intricacies of the divorce process, providing much-needed peace of mind while also increasing the odds of achieving the best possible outcome.