How Is A Business Divided In A Divorce?

Divorce is a complex process, and it can become even more so when a business is involved. If you have spent years building a business, you want to be sure that it survives the end of your marriage. Conversely, if you have supported your spouse while he or she pursued an entrepreneurial dream, you should receive part of the dividends.

At Leslie L. Abrigo, APC, we understand the many complexities that arise when dividing a business fairly in divorce. Our goal is to reach an arrangement that benefits everyone, while preserving the enterprise if possible. For years, our attorneys have successfully navigated intricate business division throughout southern California. We can help you, too.

Are Businesses Always Split During A Divorce?

California is a so-called "community property" state, which means that spouses evenly divide all assets and debts accrued during the marriage. This typically includes a private business and all its holdings, unless a prenuptial agreement explicitly states otherwise.

What Is The True Value Of A Business?

Determining the actual value of a business is the most crucial step to ensure fairness for all parties involved in the divorce. Most courts require a private appraisal of your business, which will account for the total scope of its value, including:

  • Assets owned by the business
  • Debts and other liabilities
  • The goodwill of the business
  • The value of its existing accounts receivable

California recognizes that the full value of a business goes beyond mere physical assets, which is why some items on this list are intangible. For instances, goodwill encompasses a business's reputation, customer loyalty, client list, longevity and other factors that a forensic accountant deems relevant.

Will My Business Cease Operating Because Of Divorce?

Not necessarily. In many instances, one spouse wants to continue running the business, while the other simply wants their share of the value from it. In these cases, one spouse can buy out the other after the business valuation is complete

Make Sure That Your Business Division Is Done Right

A successful business is often the most valuable asset in a marriage, which makes proper accounting that much more important. Business valuations are often too low or too high, significantly advantaging one partner over the other.

If you want to ensure a careful, meticulous examination of your business, please get in touch. You can reach our lawyers through our online form or by phone: 619-600-5902. We are available for consultations in our Chula Vista office.