When California couples divorce, if they also own a business together and do not have a prenuptial agreement in place that deals with it, they will have to decide how to divide it. While one person might want to buy the other out, this could be difficult if that individual’s money is largely invested in the business itself. In this situation, it may be possible to get a bank loan or to sign a property settlement note that allows the individual to pay the other person back over time with interest.
Another option is that the two can sell the business. Both this and the buyout option require a valuation of the business, and this could be time-consuming. Furthermore, the business may not sell immediately. Therefore, even though this may be an option individuals choose because they would like to put an end to any financial ties, it could actually take much longer than desired.
Some couples decide to keep running the business together as long as their breakup has been reasonably amicable. However, this is not an option for many. If people are left running the business on their own, they might want to look into taking on a partner. In either case, the owners should sign an agreement that deals with the rights of one to buy out the other.
In divorces involving significant assets, the process can be long and complex whether or not one of those assets is a family business. If one person came into the relationship with the majority of the wealth or if one person earned most of the money, the other person might be concerned about their financial security after the divorce. Alternately, the other individual may be worried about protecting family wealth. Both may want to discuss these concerns with their respective attorneys.