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How is a Business Interest Divided in a San Diego Divorce?

On Behalf of | Nov 23, 2021 | Professional Practice & Business Ownership

How is a business interest divided in a San Diego divorce?  The first question is simply “Is the business interest or any portion of it community property?” Is the business shared by both spouses, or is it owned by one of the parties?  What contributions have been made to the business by each spouse?  How much of the marital assets have been contributed to the business or used as collateral for business related loans or obligations?

If one party owned the business prior to marriage, and absolutely no marital assets or funds were used to support or conduct the business, it may be considered “separate” property in whole or in part.

Once these determinations have been made, the next step in the process of how a business interest divided in a San Diego divorce is the valuation of the business at the time of divorce.  There are many methods available to determine the actual value of the spouse’s business ownership interests.  The methods used should be independent, however they must be appropriate for the nature of the business itself. An outside expert is often consulted in these cases.

Valuation should consider not only the value of assets, extent of liabilities and annual sales revenues over a period of time, but the Goodwill associated with the contributions of the owner(s) as well.

Ultimately, division of the marital interest in a business comes down to three basic options:

  1. Sell the business and divide the proceeds accordingly
    2. Continue to operate the business, and both parties maintain appropriate ownership interest
    3. One spouse provides other assets to offset the valuation of the business ownership interest of the other.

The experienced divorce attorneys at Burke and Domercq have decades of expertise in protecting our client’s goals and objectives.  If you or your former spouse own a business or an interest in a business or professional practice and are asking are asking how is a business interest divided in a San Diego divorce we invite you to 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.