Who gets the family business in a divorce?

On Behalf of | Nov 18, 2021 | Uncategorized |

A California divorce involves many moving parts. If you and your spouse own a business together, you may need to take extra steps during asset division to divide its value accordingly. Your degree of entitlement when it comes to the family business, and that of your spouse, depends on several variables, among them when you, your partner, or both of you started the business.

According to the Judicial Branch of California, your family business is “property” in the eyes of the law, but you need to determine if it is marital or separate property.

Determining marital versus separate property

Whether your business is marital or separate property depends on who started it and when. If you or your soon-to-be-ex had the business before your marriage began, then the business is typically separate property. If you bought or started the business after you married, then it is likely marital property.

Recognizing exceptions

In some instances, a business you or your ex purchased prior to your marriage but ran together during your marriage may still constitute marital property. However, this depends on what happened during the course of your marriage and how much the value of the business may have increased in the time since. Sometimes, California’s family court system may have to use one of several apportionment methods to divide business interests in a divorce.

Dividing business interests in a California divorce is often complex. However, neglecting to consider this area of asset division has the potential to cost you considerable money in the long run.