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How do you divide a business during divorce?

On Behalf of | Jan 29, 2025 | divorce, property division

During divorce, splitting assets often creates stress, but dividing a business adds extra complexity to the situation. Whether you built the business together or one spouse managed it primarily, California law considers it community or shared property if you started or grew it during marriage.

Let’s explore your options for handling this challenging aspect of divorce.

Buying out your spouse

The most straightforward option involves one spouse purchasing the other’s share of the business. You’ll need a professional valuation to determine the business worth, then arrange payment through cash, other assets or structured payments over time.

This choice works well when one spouse wants to maintain complete control. If you started the business or managed it throughout your marriage, this is the ideal option for you.

Running the business together

Some couples choose to continue as business partners after divorce. Take note, however, that this approach requires:

  • Clear communication channels
  • Defined roles and responsibilities
  • Written agreements about decision-making
  • Profit-sharing arrangements
  • Exit strategy plans

Consider this option only if you are confident you can maintain an amicable relationship with your ex-spouse.

Selling and splitting the proceeds

Sometimes, selling the business offers the cleanest break. You’ll divide the proceeds according to California’s community property laws, allowing both parties to start fresh. This option might work best if neither spouse wants to continue running the business or cooperation proves difficult.

Making the right choice for yourself and your business

Like many aspects of a high-asset divorce, dividing a business requires careful consideration of your long-term goals and financial stability. Working with an experienced family law attorney can help protect your interests, explore your options and find a solution that fits your needs.

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