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What Happens to Carlsbad Business Owners in a Divorce

On Behalf of | May 20, 2019 | Divorce

What happens to Carlsbad business owners in a divorce?  How is the ownership of a business handled in a North County San Diego divorce?  What happens to the business itself?  Can the company continue to operate during and after the divorce?

Solo business owners worry about how their company will be handled in a divorce.  You’ve invested your money, time, hard work, creativity and business savvy to develop a successful business. Your former spouse has had no interest or involvement in your company. Why should they be able to claim any part of it in the property settlement?

California family law recognizes a business that was started or acquired during the course of the marriage as “community property.”  Community property is to be divided equally as part of the separation agreement.  It usually isn’t possible to simply divide an ongoing business concern or professional practice.  What happens to Carlsbad business owners in a divorce?

The first step is to establish the “valuation” of the community’s interest in the business itself.  There are several methods used to establish the value of a business and this is usually a highly contentious issue.  This is especially the case when the divorce involves a professional practice.

Many LLC operating agreements, professional practice agreements and corporate documents attempt to establish a very small value for the business interest in the event of a divorce.  This will not stand up to the scrutiny of the Court.

The Court will seek independent testimony to establish valuation if the parties cannot come to an agreement.  Once the value of the community’s interest in the company is established it must be divided between the parties as part of the community property settlement.  Usually the business owner may transfer another asset such as an investment or savings account or equity in the family home to offset the former spouse’s community interest in the business.  In other situations the business might be sold.

The experienced family law certified specialists at Burke & Domercq fight for our clients to protect their interests during property division – especially when the interests of a closely-held business or professional practice are involved.

If you have questions about how business assets and professional practices are handled in a Carlsbad divorce we invite you to contact us or call 760-389-3927 to schedule an appointment with one of our attorneys.