A divorce involving a business, whether owned by both spouses or one spouse, is perhaps the most complex type of divorce case. The business, or interest in a business, will more than likely need be valued by an expert and divided according to complex formulas. For this reason, it is imperative that you hire a divorce attorney who has experience with divorces involving businesses and business interests.
At Wallin & Klarich, our divorce attorneys have over 30 years of experience in helping our clients evaluate marital businesses and ensuring that their rights in the business are protected.
Community Property Business or Separate Property Business (California Family Codes 760-770)
Determining how to divide a business in a divorce can be very difficult and takes several steps. The first step is to determine whether the business is community property or separate property in order to determine each spouse’s interest in the business. Generally, if an asset is community property, each party will be entitled to a 50% interest in the asset. If the asset is the separate property of one spouse, the other spouse will not have any interest in that asset. However, they may be entitled to reimbursement if any community funds were used for the benefit of that asset.
Community property is any property acquired during the marriage by either spouse while residing in California, unless it is received by one spouse as a gift or through inheritance to that spouse only.
Separate property is any property acquired by a spouse prior to the marriage or after the date of separation. This property will be deemed that spouse’s sole and separate property.
Once it is determined whether the marital business is community property or a separate property asset of either party, the court will then need to go to the valuation stage to determine what the value of the business is.
Valuation of a marital business is a difficult task. California appellate courts have created several complex formulas for varying situations involving marital businesses. Only an experienced divorce attorney should engage in trying to calculate the value of a marital business. You should never attempt to do so on your own.
An experienced divorce attorney will rely on experts, including Certified Public Accountants and Forensic Accountants, in order to provide valuable information to plug into these formulas. Some important data that these experts will provide are:
1) The goodwill of the owner of the business;
2) Comparative values of similar businesses; and
3) The value of any deferred compensation or business perks.
Once all of this vital information is obtained, your experienced divorce attorney will analyze the information and determine your interest in the business to protect your legal rights.
Call the Divorce Attorneys at Wallin & Klarich
If you are involved in a divorce case in which you or your spouse owns a business, it is crucial that you hire an experienced divorce attorney immediately to protect your interest in the business. Our divorce attorneys have over 30 years of experience in handling all types of divorce matters, including those with marital businesses.
With offices located in Orange County, Los Angeles, Riverside, San Bernardino, San Diego, Sherman Oaks, Torrance, West Covina, Victorville, and Ventura, we are always available, wherever you happen to live or work.
Call us today at (888) 749-7428 for a free phone consultation. We will be there when you call.