Encinitas is famous for great surfing along beautiful beaches, historic architecture, specialty retail, and upscale dining. It’s an affluent and welcoming place, and many local business owners are thriving. However, if you own a business and plan to divorce, it is crucial to understand what this process could mean for your future. You need to speak with an Encinitas business division in divorce lawyer right away.
Representing Encinitas, CA, Business Owners in Divorce
The attorneys at Neumann Family Law, A.P.C., have extensive experience resolving all types of difficult divorce cases for clients in Encinitas and surrounding communities of California. We have successfully represented many clients in high-net-worth divorces and resolved complex disputes regarding business division in divorce. If you are preparing to end your marriage as a business owner, it is vital to know what to expect and how our team can help.
The Public Policy Institute of California reported in 2023 that there were more than 1.7 million private-sector businesses operating in California, and a 2021 study reported that more than 10% of all small businesses in the United States are owned and operated by married couples. While running your business with your spouse can be incredibly rewarding, it can be extremely challenging to divide a business in a California divorce.
Divorce in California requires dividing all property according to the community property statute, and many married couples will face additional challenges like child custody determination, spousal support agreements, and more. Divorce can be an expensive and emotionally straining process, especially when you are worried about the future of the business you have built. Trust the team at Neumann Family Law, A.P.C., to provide compassionate support in this situation.
Understanding How California’s Community Property Law Affects Your Business
In California, the community property statute applies to every divorce. This means that all of the community property controlled by a married couple must be evenly divided in their divorce proceedings. As the couple begins their divorce proceedings, they must each produce financial disclosure statements that detail all of the property, assets, and debts they control, and this could include their business.
Each spouse has the right to claim separate property, and this will usually include things they owned prior to marrying, gifts, and inheritance left solely to them. In some cases, separate property transmutes to community property under certain conditions. For example, if one spouse owned a business before marrying but the other spouse helped run the business and contributed to its success, the business will likely qualify as community property.
It’s common for property characterizations in divorce to be contested, and having an experienced Encinitas business division in divorce lawyer can be a valuable asset in such a situation. Your legal representative can help you secure any records and documentation you may need to prove the true characterization of your business. If the business qualifies as community property and is subject to division, your attorney can explain your options for handling this.
Dividing a Business in an Encinitas Divorce
Property division in California requires accurately characterizing all of the divorcing couple’s property as either separate or community property, and then each asset and debt must be assessed for value. When it comes to a business, it can be difficult as most businesses control both tangible and intangible assets.
Tangible business assets can include cash on hand, physical inventory, equipment, real estate, and accounts receivable. These are generally assessed with the appropriate financial documentation. Intangible assets, on the other hand, are more subjective and challenging to evaluate. Intangible business assets can include intellectual property like patents or trademarks, as well as professional relationships.
Once all of your business’s assets and debts have been evaluated, it’s possible to complete the business division in several ways:
- You and your spouse have the option to continue running the business as co-owners. This may be a challenging process that requires drawing up a new operating agreement and defining each of your respective rights and responsibilities for the business.
- One spouse may buy out the other spouse’s share of the business to assume sole ownership and control. In exchange for the cash value of half the business’s value or in exchange for alternative community property equal to half the business’s value, the other spouse will surrender their share of ownership to the other.
- The spouses may decide to either sell or liquidate the business and divide the proceeds equally. They must first settle any outstanding business debts with creditors.
It is important to remember that if you pursue sole ownership of your business in divorce, you will be assuming responsibility for the business’s debts along with taking control over its assets. Neumann Family Law, A.P.C., has resolved many business division cases and can help you understand the potential risks and benefits of all of your options.
Making this decision can be difficult in many ways, and your Encinitas business division in divorce lawyer can help you feel more confident about your choice. The team at Neumann Family Law, A.P.C., can also help with all other aspects of your divorce case, including things like child custody determination and spousal support.
How Your Encinitas Business Division in Divorce Lawyer Can Help
Divorce can be one of the most challenging experiences of a person’s life, and aside from the emotional strain of the situation, any divorce can impact your financial situation in many ways. Business owners invest a great deal of time, money, and effort in building and maintaining their businesses, and it is natural for anyone heading for divorce to worry about what this process means for them.
Neumann Family Law, A.P.C., can develop an individualized strategy aimed at helping you achieve your goals for your divorce in Encinitas. We have successfully helped many business owners in the area resolve the various complex issues the business division entails, and will apply this experience to your case.
Divorce is a lengthy and difficult process, so it is important to reach out to legal counsel you trust right away once you have determined that your marriage is ending. The team at Neumann Family Law, A.P.C., looks forward to assisting you with your case, so contact us today and schedule your consultation with an experienced Encinitas business division in divorce lawyer.
*CFLS = Certified Family Law Specialist by the State Bar of California Board of Legal Specialization
