When you and your spouse get divorced, most of your assets will be divided between the two of you in a fair and equitable way. While this is fine when you’re only dividing personal property, it can be more complicated if you’re a small business owner. Your business may be vulnerable to the asset division. Here’s what your California family law attorney wants you to know about the division of business assets during a divorce.
How You Built Your Business Matters
One of the most common reasons that small businesses get divided during a divorce is because the founder used co-mingled or marital funds to start the business. If you started it with money from a joint checking account or funds that your spouse may be able to claim a right to, your business’s assets could be divided. But if you started the business with capital from outside investors or used funds that were yours alone (and typically acquired before the marriage), your business could stay in your name entirely and may not be subject to division.
Companies Started Prior to the Marriage Typically Stay With the Founder
If you started your business prior to getting married, you may have a stronger claim on the ownership of the company than your spouse. This may even be the case if you grew your business with marital funds during your marriage. Keep in mind that you’ll need to show the court proof that you started the business before getting married. Your articles of incorporation, first business tax return, or other similar documents may be able to satisfy this requirement. Your California family law attorney will help you figure out which types of evidence you’ll need.
Division of Co-Owned Businesses Is an Option
If both you and your spouse can claim a right to the business, dividing the assets is always an option. This can go several different ways and it largely depends on your relationship and your comfort level. If you and your spouse started the company together and are confident that you can maintain a professional working relationship, the business can stay in both of your names. But if you can’t imagine staying in business with your spouse, you may be able to buy out their share of the business or vice versa. This way, you’ll be able to retain control over the company and won’t have to dissolve the business.
You Can Always Negotiate With Your Spouse
You don’t have to let the court figure things out with your business. Instead, you can always try negotiating with your spouse. By negotiating, the two of you can come up with terms that you both feel are fair. Your attorney can help you with every step of the negotiation process. And if you can’t reach an agreement, you can always let the court figure out a fair way to divide your business.
Let Jackman Law Firm Help
If you and your spouse have decided that the time is right to dissolve your marriage, but you’re concerned about how the divorce could impact your business, don’t panic. Schedule a consultation with Jackman Law Firm today. Our team will explain everything to you so you can better prepare yourself for the upcoming proceedings. And if you need an experienced California family law attorney on your side, we’re happy to represent your case.