California is among the “community property” states, requiring equal distribution of marital property. Determining the value of all that a couple owns is complicated, especially for professionals.
Professionals and Divorce
The value of an ongoing LLC, sole proprietorship business or professional practice may include “goodwill.” Take the example of an attorney at a law firm, or a doctor. Not only do they have an annual income, retained earnings and “perks” as a business owner, they have a reputation that generates referrals and a relatively predictable ongoing clientele. The public knows of the business and has confidence in it.
Therefore, the spouse who is a partner in the business “owns” something of value that must be included among assets to be divided. The other spouse must receive property or assets to balance this value. The spouse is essentially a “silent partner” in the business and must be “bought out” in a manner of speaking.
A professional in a large firm or practice in addition to their salary, generally participates in partnership earnings, stock options, bonuses and other sources of revenue to which the spouse may be entitled.
If the law firm or business existed prior to the marriage, the spouse may not have an interest in it. But growth of the firm and goodwill may be part of the marital estate, to be shared upon divorce.
Call Us Today to Start Working Toward a Better Tomorrow
Attorney Dorie A. Rogers has 30 years of experience providing legal advice to clients involved in high asset divorces. Our legal team has extensive experience and familiarity with complex property division, especially in high asset divorces. Our goals include maximizing your share of complex property division, but also minimizing your tax implications.
For more information, or to schedule a consultation with an Orange County lawyer, please call us at 714-602-1492 or send us an e-mail.