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Business Ownership is a Substantial Challenge in Many North County Divorces

On Behalf of | Aug 13, 2020 | Professional Practice & Business Ownership

Business ownership is a substantial challenge in many North County divorce cases.  Generally speaking higher amounts of assets and retirement accounts lead to more legally complex issues in your divorce.

Business ownership or a professional practice will require careful consideration, planning and negotiation.

If the two of you jointly own a business you will face several choices including, but not limited to:

  1. Sell the business
  2. Use the community assets of one party to buy out the other
  3. Obtain financing or use accumulated cash and assets on hand to buy out one of the spouses
  4. Develop a strategy to continue working together after the divorce as business partners

If the business or professional practice interest is only held by one of the spouses the first question will be is the business ownership interest the “separate” property of the business owner or is the interest held as a “community asset.?”  The second question will be “how will the community interest of the non-owner spouse be offset so that the business person may keep their business or professional practice after the divorce?

The fastest and easiest solution is to sell the business or the interest in the professional practice.  The resulting proceeds make division of community property much more efficient.

Business ownership is a substantial challenge in many North County divorces due to “valuation” and the “offset” of the non-ownership spouse’s community interest in the company.

In most cases, the value of any business ownership interest must be established before the Court through a process known as “valuation.”  There are many acceptable methods for establishing the valuation of a business or professional entity.  Valuation is often a contentious and legally challenging issue.  Ultimately the valuation also establishes the marital interest of the non-ownership spouse in the company (if any).

Most business owners wish to keep their business interests through and after the divorce.  In order to accomplish this they must “offset” the community interest of their former spouse in the company.  This can be accomplished through equity in the family home, other investment or retirement vehicles or even a properly structured instrument securing the former spouse’s interests.

This is why business ownership is a substantial challenge in many North County divorces.  If you and your former spouse co-own a company or you own a business or professional practice and are considering a divorce you will need experienced, proven counsel.

Protect your own interests and contact us or call 760-389-3927 to schedule an appointment for a remote or socially distanced consultation with one of our experienced Certified Family Law Specialists.