Comprehensive Solutions to Difficult Family Law Issues

Protecting a business throughout a divorce

On Behalf of | Oct 12, 2017 | Blog

Divorce is rarely simple, but, in California, it can prove far more complex and devastating than spouses may expect. This is particularly true for individuals who face divorce and also own a business.

California is a community property state, which means that divorcing spouses divide marital property equally, rather than “equitably.” While this distinction affects couples in different ways, it poses a significant threat to business owners if the their business is considered marital property.

If the business is marital property, it may prove difficult to keep it intact though the divorce, since both spouses may have a claim to a portion of the value of the business, just as they would any other marital asset or liability.

In order to protect your business from dissolving in your divorce, and affecting your customers or employees along with it, you must prioritize the business in your divorce negotiations and use every tool at your disposal to do so. In this case, it is crucial to secure high-quality legal counsel from an attorney who understands the intricacies of high-asset divorce in California. Proper legal counsel can protect your rights and priorities while identifying strategies and defenses you may not realize you have available.

Is a post-nup possible?

In some cases, you may find it possible to ask your spouse to sign a post-nuptial agreement that protects your business from property division. However, if you choose this path, be sure to seek proper legal counsel to craft a post-nuptial agreement that has good odds of standing up in court if your spouse chooses to challenge it later on in the divorce process.

Is the business marital property?

In some cases, it is not clear whether a business is marital property or not. In these types of situations, a business owner may have steps he or she can take to more clearly define the business as non-marital property. These include keeping the business as separate from the marriage as possible.

Keep money in the business in the business, and money in the marriage in the marriage. If you “cross-pollinate” these two assets, it becomes more difficult to prove they are legally distinct from each other.

If your spouse works for the business in any way, you must end this immediately. You must keep very clear, well-organized records for both the business and the marriage to make sure that a court can see how separate the two are.

If you must count the business as marital property, you may need to have it professionally valued. Once you know exactly what it’s worth, you will have a better understanding of how drastically you must sacrifice other assets to keep it intact.

Be sure that you seek out all the professional guidance you need to weather this difficult season and build a strong foundation as you enter the next one.