What are the best strategies to protect and keep your business in a San Diego divorce case? Those with successful business interests or a professional practice often ask our Certified Family Law Specialists how to preserve that interest through a divorce. While there are several strategies to consider, there is also a word of warning: do not attempt to use your business to shield income or hide assets or money. This can only work against your own interests and forensic experts will be able to get to the bottom of most of these schemes.
The first and best strategy to protect and keep your business in a San Diego divorce is always to keep your business finances completely separate from your marital finances. Any commingling of assets between the two can cloud the question of whether or not the business interest is “separate property” or how much of it is genuinely community property. This will be the central question of the divorce from the perspective of the business. Generally speaking, your spouse will be entitled to a portion of the valuation of the business which is determined to be community property.
The second strategy is to make sure you are paying yourself a fair and just salary. We’ve seen several cases where an attempt to pay a business principal less than their genuine value to the business backfired during community property settlement. Paying themselves less actually increased the marital value of the company which wound up being divided in property settlement. Pay close attention to the process of “valuation” and work with our Certified Family Law Specialists to ensure a fair and just valuation.
The third practical strategy to protect and keep your business in a San Diego divorce is to recognize that if you wish to keep the business you will need to “offset” your former spouse’s community interest in the company with some other asset(s). Give consideration to offering other assets, portions of retirement accounts or even an arrangement to make payments over time to offset any marital interest in your business.
You need experienced, proven counsel. You need strong strategies and a firm understanding of the process of business valuation and property division. You need attorneys who will protect your interests and accomplish your goals and objectives.