If you are heading toward divorce, you are probably experiencing one of the most stressful times of your life. Faced with pressing questions and impossible choices, you are working against all odds to bring a brighter future from what may be a dark and emotional time for you. This may be even more of a challenge if your business is on the table for asset division.
Like many business owners, you may have invested your heart and soul, not to mention a great deal of money and time, into your business. Whether this was an enterprise you began before you married or after the wedding day, you have many options to consider to determine the fate of your business and potentially your livelihood.
What are your choices?
California is a community property state when it comes to divorce. This means that everything you acquire during your marriage, whether assets or debts, belongs equally to both of you. During divorce, the court strives to divide those marital assets equally. What does this mean for your business? Much of your answer will depend on certain factors, such as whether you signed a prenuptial agreement and whether your spouse is willing to negotiate. The most common choices include the following:
- You keep the business and buy your spouse’s share or trade with your spouse for other assets that are comparable, which may allow you to preserve the business and continue building its success.
- You and your spouse keep the business and operate it together, which may be a short-term fix and will require you to work together amicably.
- You sell the business and split the proceeds equally, which means the end of your business but allows you a clean break and a chance to start a new venture.
Any sale or transfer of business shares may have tax implications. You should be aware of these and learn how best to minimize them. Additionally, you will need a thorough and mutually agreeable valuation of the business that takes into consideration more than just the tangible assets. In fact, when seeking legal representation for your divorce, you would be wise to look for an attorney who has knowledge and experience with business valuation and who will help you explore your options and work toward your goals throughout the divorce process.