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Considering a business when going through a divorce

On Behalf of | Nov 5, 2015 | Divorce

Community property laws in California call for an equal distribution of a couple’s joint assets when going through a divorce, and this can understandably worry entrepreneurs who are afraid of losing a business they started. A spouse might be entitled to a value for his or her share of the business, but the particulars in one’s situation and the willingness of both parties to communicate and negotiate could lead to a variety of outcomes.

Couples who cannot come to a settlement agreement must go before a judge, which often takes longer and is more costly. There is also no guarantee that one will get any or all of what he or she asks for. When it is possible for a couple to speak honestly and compromise, mediation or negotiation helps spouses make an arrangement where both parties benefit and have some of their requests met.

Thinking practically is often difficult, but letting divorce proceedings drag on because of hurt feelings and arguments is what ends up costing the most. If one owns a stable business, it is important to know that this spouse may have to pay alimony if the other partner does not work. Understanding the divorce process and that one may have to sacrifice some assets to get others is important so that one is not being needlessly contentious.

Spouses typically have more freedom when avoiding the court process, and this could help one protect a business since one might want to create a plan with an attorney when going through a divorce. For example, the spouse with the business could offer to let the other party have the house in exchange for the latter spouse’s portion of the business. This is only one possible scenario as a couple may have many options based on the assets and debts they have acquired together.