If you and your spouse own a business, divorce can be complex
After the end of a marriage, one of the most complex issues both parties need to resolve is property division. California is a community property state, meaning all marital assets are divided between spouses in equal proportions. The same rule of community property applies when one spouse owns a business; that business is also subject to equal division at the time of divorce. In fact, it is a managing spouse’s duty to disclose all matters pertaining to the business to his or her spouse.
Many Orange County residents who operate a business know that family-owned businesses enjoy certain tax exemptions. However, after divorce these exemptions are considered income and as a result, become taxable. In order to address such issues, advisors can determine the value of the family-owned business and help evaluate the monthly income generated by it. Determining the income is also important for various other divorce legal issues such as child support and spousal support.
In addition to determining income, the timing of a divorce is also a crucial factor in business valuation. Because courts generally set the valuation date of a business close to the hearing date, there can be a significant difference in the valuation which can, in turn, have a considerable financial impact on how the entire property division exercise unfolds. Thankfully, for addressing issues such as this, California courts permit a change of the valuation date. Interestingly, California laws also allow the “good will” generated by a business in its monetary valuation.
In the event of a divorce where a family business is part of the property division, an experienced lawyer’s advice is valuable. Our law firm can help you. To learn the services we offer, please visit our website. We have almost three decades of experience in dealing with various complicated divorce cases in Orange County. We understand how difficult the property division process is, especially when it involves the division of a family owned business.