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Business Valuation and Division in a Divorce

On Behalf of | Apr 12, 2022 | Firm News

Are you considering a divorce in North County San Diego?  Do you own a business or an interest in a professional practice?  If the answers to both questions is “yes” the issues of business valuation and division in a divorce should be one of your primary concerns.

California is a community property state.  In the absence of a written agreement concerning the division of property (such as a prenuptial agreement) all assets and debts acquired during the marriage are community property and must be divided equally in a divorce.

When did you acquire your business? Was it before or after the date of your marriage?  If you owned your business or professional practice interest prior to marriage at least a portion of it will be considered to be a “separate” asset.  This will lead to a complex process of evaluating how, when and if any marital funds were used to support the business.  This will be used in a calculation to determine the percentage of the business ownership which is separate versus that which is community property (if any).

If the business interest was acquired during the marriage it will in all likelihood be considered community property.

Business valuation and division in a divorce is quite legally and financially complex.  It is crucial for the valuation of your business to be carefully and closely managed.  We work closely with experts to identify and establish the value of all assets and liabilities through the Date of Separation (DOS).  Any increase in value after the DOS is considered “separate” property.

It is in the opposing party’s interest to present the court with the highest possible valuation.  This provides a higher amount of community interest in the business and therefore more money after community property division.  We work to protect our client’s interest in these cases to ensure a fair valuation is established.

Usually the business owner wishes to keep the business after the divorce.  In order to do so they must “offset” their former spouse’s community interest in the business with other assets.  This may be anything from retirement or investment accounts, equity in or possession of the family home or even a secured promissory instrument.

Business valuation and division in a divorce in Carlsbad requires skilled and experienced legal counsel.  The attorneys at Burke & Domercq have decades of experience in Carlsbad Family Law Courts and are Certified Specialists in California Family Law.  We have extensive experience in these complex divorce matters and work to accomplish your specific goals while protecting your interests.   We invite you to review the strong recommendations of our clients and the legal industry and contact us or call 760-389-3927 to learn more and schedule an appointment.