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Will I Have to Sell My Business Because of Our Divorce in North County?

On Behalf of | Feb 7, 2020 | Professional Practice & Business Ownership

A common concern among business owners is how the business itself or a professional practice will be handled in a divorce. You may wonder “Will I have to sell my business because of our divorce?”

Business or professional practice valuation and the division of the community property interest in a Carlsbad, Vista or Carlsbad divorce case are very complex legal issues. The decades of experience each of our Burke & Domercq, APC attorneys brings to your case is crucial in a divorce involving business ownership.

The short answer to the question is “No, most businesses do not have to be sold simply because of a divorce.” The impact of a divorce on your business is limited to the community property interest in your company. If you started or acquired your business during the course of your marriage, the “community” (you and your spouse) have an interest in the company. That interest must be divided during the course of the divorce.

This begins with a valuation of the business interest.  Once the actual value of the interest is determined we must calculate the “community’s” interest in that valuation.  Community property is usually divided fairly equally between both spouses.

Let’s use a simple example where the value of the ownership interest in the business was $200,000.  If 100% of this interest is considered to be community property and the division is to be 50%/50% your spouse would have $100,000 in equity in the business.  You must offset this with another asset in order to keep the full interest in the business going forward.  You might exchange an additional $100k in the equity of your family home or from a retirement account in order to offset their “community” ownership interest in the business.

These are complex calculations and the legal process involved in these cases requires extensive skill and expertise. If you are concerned about business ownership in a Carlsbad, Vista or Carlsbad divorce we invite you to contact us or call 760-389-3927 to schedule an appointment with one of our experienced attorneys.