Family Matters.
When It Really Matters.

The Division of the Community Property Interest in a Business During a San Diego Divorce

On Behalf of | Oct 13, 2021 | Professional Practice & Business Ownership

What are the steps taken to accomplish the division of the community property interest in a business during a San Diego divorce?  If you are a business owner or own and run a business with your spouse the process of determining the status of a business or professional practice and dividing any community property interest in that business will be a complex and often contentious part of your San Diego divorce.

The are basically three steps when approaching the division of the community property interest in a business during a San Diego divorce.  The first step is to determine if the business or professional practice is community property, the separate property of the business owner, or an asset which is blended between the two.  When was the business started or acquired?  If the date of startup or acquisition is after the date of marriage the asset is very likely going to be community property.  If the business interest was acquired prior to the date of marriage, there is still likely going to be some marital interest in the value of the company.  If the business was started or acquired prior to the date of marriage, and marital funds were never commingled with the business, and the labor of the non-owning spouse was never used to support the company it will probably be considered to be the separate property of the business owner.

Once the nature of the business asset has been established, the Court must establish the value of the company itself and therefore the community interest in the company.  What is the company worth?  Does the value of the asset justify the cost to contest the value of the business interest?  There are many legally proven and accepted methods to establish the value of a business asset.  The expert appraiser must consider the nature of the business itself when determining the methodology used to conduct valuation.  Any valuation must also reflect the “goodwill” associated with the company which applies to the reputation of the business, it’s brand and the likelihood of future success and income.  Valuation is a complex financial and legal process.

The next step in the division of the community property interest in a business during a San Diego divorce is the division of any resulting community property interest in the business asset.  Most business owners want to keep their company after a divorce.  When both spouses have worked together to establish and build the company the process can be significantly more complex.  If the owner of the business wishes to keep the company they must offset their former spouse’s community interest in the business with other assets or some other form of security.

This is why it is so important to work with the proven, experienced Certified Family Law Specialists at Burke & Domercq.  We have decades of successful experience protecting our clients interests in these legally and financially complex divorce cases.

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.