Establishing a family business is probably one of the biggest milestones in a married couple’s life. You and your spouse worked tirelessly for several years to build and maintain a business. But now that you are facing a divorce, you might wonder how your business would be divided among you.
In California, most properties you acquire during your marriage are considered jointly owned. During the divorce process, the court will distribute your marital properties equitably, ensuring a fair share of assets and debts among you. If you established and ran your family business together, it is most likely a marital property. You and your spouse both have rights over the business.
Explore your options for managing your family business
The divorce process could get even more complicated when asset division involves a family business. You and your spouse can discuss your plans for the business and determine how you want to be involved in it. Here are some of the common arrangements you can explore when dividing a business during a divorce:
- Sell the business: You and your spouse can sell the business and divide the profit among you.
- One spouse keeps the business: You or your spouse can buy the other’s business share based on its appraised value. This is a common arrangement when one spouse runs the business.
- Co-own the business: You can keep the arrangement as is, especially if you each play a crucial role in managing the business. This could also exempt the property from divorce negotiations.
Whichever arrangement you choose, it could have a drastic impact on your life. Every arrangement has its own pros and cons. For example, co-owning a business might be the best route for some separating couples. However, it also means that they must continue working together amid their differences and current relationship.
Divorce could be an overwhelming experience. Aside from the emotional turmoil, you must also navigate complex legal and financial matters. For some, their divorce could also mean the end of their business and an opportunity for a fresh start. In this intricate situation, working with a divorce lawyer experienced in cases with significant business assets could help you assess your situation and attain the most favorable outcome for you.
