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Holding on to your business during divorce

On Behalf of | Mar 5, 2018 | divorce, property division

Divorce can be a complicated matter that encompasses a wide range of issues. There is the emotional element for spouses as well as other family members that come from terminating a flawed marriage. However, marriage is also a legal agreement between two people recognized (for legal and tax purposes) by the government. This can get much more complicated if one of the spouses is a business owner or they share ownership of a business.

Whether they opened a successful tech start-up or a brick-and-mortar business, the spouse (or spouses) involved will often want to keep their business after having spent countless hours to make it a success. Â However, if that business was launched after marriage, the other spouse may be entitled to part of the business just as they would to other marital assets. According to, separate property can even lose that designation if the business is commingled with other marital property. For example, launching the business using funds from a commingled or joint bank account will likely lead to calling the business a marital asset.

California Is A Community Property State

Our home is one of a handful of states that employs community property laws. Unlike many states where equitable distribution is a fair distribution based on circumstances of the couple’s marriage, community property states divide marital assets 50-50. This is unless there was a binding prenuptial (or other) agreement put in writing.

Valuing A Business

If the business is a marital asset, the next step is valuing the business so one side can buy out the other. A skilled attorney and other financial experts can look the business and determine its value. Issues to consider include:

  • Net profits
  • Growth trends and potential
  • Age of business
  • Company assets
  • Competitors in the market
  • Online traffic and sales

Divorced And Sharing The Business

Some marriages do not end with anger and tears. Sometimes it is just a matter where the couple was incompatible. Or perhaps they lost the passion even if they love their kids and work well together. Maybe they are simply pragmatic and understand that the business needs both their skills for continued success. Whatever the circumstances, most couples will quickly find out that dividing a business can often add a lot of expense to the divorce proceeding. It also stretches out the process, although that may not matter if you plan to stay in business together.

Do What’s Right For You

An article at points out that it is possible to share a family business and make it a success, but dividing or keeping a business is like so many others issues involving families and divorce — the needs of the couple and the children are unique. Working with a family law attorney with a background in business or high-asset divorces can be a tremendous asset as you find the right solution for your divorce and business needs.

Source:, “Protecting Your Business From Divorce,” Jeff Landers, Accessed on Feb. 22, 2018, “How To Handle Divorce In A Family Business,” Larry Light, Accessed on Feb. 22, 2018

Tags: Divorce