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Taking Care of a Business in a San Diego Divorce

On Behalf of | Sep 8, 2021 | Professional Practice & Business Ownership

Are you concerned about taking care of a business in a San Diego divorce?  If your divorce involves the ownership of a small family business, an LLC, professional practice or an interest in corporate ownership the process of valuation and property division in your case will be much more legally and financially complex.  Business owners understand the nature of risk and often ask us how to protect their interests and reduce the impact of the divorce on their business interests.

Here in California, community property is to be divided fairly between the two spouses.  The first issue therefore is to determine what portion of the asset is going to be considered to be community property and the portion of the valuation which might be the separate property of the business owner.  Generally speaking, if the business interest was owned by a spouse prior to the date of the marriage it will be considered to be separate property.  If the business interest was acquired after the date of the marriage and before the date of separation it will be considered as community property in the absence of an agreement between the parties to the contrary.  Note: if marital funds or labor were invested into or used to support the business in any way the asset may be commingled and the Court must determine that portion of the business valuation which is community and that which is separate.

All assets of a business are subject to division including but not limited to real estate, machinery, inventory, equipment, accounts receivable and operating income.

The best plan when taking care of a business in a San Diego divorce is to reach agreement regarding the status of your company prior to the marriage (prenuptial agreement) or during the marriage (postnuptial agreement).  Marriage related agreements such as these must be in writing and entered into willingly and without coercion, require an appropriate amount of time for review prior to signature and ultimately must meet the requirements of California law.  In addition, the Court will require the elements of the agreement to be generally “fair” for both parties.

Mediation is often a cost-effective and private strategy when taking care of a business in a San Diego divorce.  All information shared in mediation is confidential in nature and keeps private information concerning the business out of the public record.  Mediation provides an opportunity for each party to influence the negotiations while maintaining a level of control over the process.

If the parties cannot reach agreement the matter will be decided entirely by the Judge in your case.

Taking care of a business in a San Diego divorce involves offsetting any marital interest which might exist while maintaining ownership of and control over the company.

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.