Family-owned businesses and divorce
Community property is a common issue that many couples that are divorcing run into. Laws for this issue differ from state to state, so some may find it difficult to understand their state’s laws and how property is to be divided should a divorce occur. Not only may there be disputes about who will get the house, the family business may also be something that spouses find themselves wanting to discuss.
In California, family businesses are considered community property and there is the chance that one spouse may be awarded an equal amount of what the business is worth in the event of a divorce. With the business being considered community property, you may be asked to disclose the financial records so the business’s value can be established and other things such as child support and alimony can be determined. This also allows the spouse who is not the owner of the business to receive a fair share of the business income. The business-owning spouse must share this income due to certain benefits that were accessed, such as tax breaks, during the marriage.
Even though California typically divides property equally, this doesn’t mean that it is always done this way. There is the chance that the court will look at other factors, such as fault, physical health and size of estate to determine property division. If disproportionate division is necessary, one spouse may receive less than the other. To fully understand the process of property division, you may want to speak to an attorney who is familiar with California state divorce laws.
If you are currently going through a divorce and own a business, a California divorce attorney may be able to assist.