Rancho Santa Fe is one of the most affluent areas of Southern California. There are many high-value businesses in the area, large and small, like the various stalls at the local farmer’s market and Bloom Again, a popular upscale retail store that supports the local Garden Club. If you own a business and are planning to divorce, you need to know how this process affects your business. A Rancho Santa Fe business division in divorce lawyer is the ideal resource for your situation.
Representing Business Owners in Divorce in Rancho Santa Fe, CA
The attorneys at Neumann Family Law, A.P.C., have years of experience guiding clients through some of the most complex divorce cases in Rancho Santa Fe and surrounding communities of California. Our firm can provide responsive and results-driven legal counsel in high-net-worth divorces, and we excel at resolving business divisions in divorce.
You have likely invested a significant amount of time and energy into your business, and it is natural to worry about how your divorce could affect it. As of 2023, there were more than 1.7 million private sector businesses throughout California, and about 10% of small businesses in the United States are owned by married couples. Operating a business with your spouse can be rewarding, but when you decide to divorce, dividing businesses can be extremely difficult.
Our team can help you understand the California divorce laws that apply to your situation. We can explain whether your business qualifies as separate or community property for the purposes of property division in divorce and advise you of your options for resolving this aspect of your dissolution proceedings.
Understanding Community Property in a California Divorce
California enforces a community property law in divorce, meaning any assets and debts classified as community property are evenly divided between the spouses. Each spouse has the right to claim separate property, but only certain types of property may be claimed in this manner. There are three steps that must be completed for all types of property division in a California divorce:
- Characterization. Each asset and debt controlled by either or both spouses must be accurately characterized as either one spouse’s separate property or the couple’s shared community property. In some cases, a particular asset can initially qualify as separate property but transmute to community property over the course of a marriage.
- Valuation. All assets must be assessed for value. This applies to debts as well as property and assets. The overall value of a business typically hinges on the business’s total assets and current market value compared to the business’s total debts.
- Division. Once all community property assets and debts are valued correctly, they are all divided equally between the divorcing spouses.
Business interests can be particularly challenging in divorce. If the couple started the business together while they were married, it is likely for the business to qualify as community property for the purposes of property division. It is also possible for it to qualify as community property if it belonged to just one of the spouses prior to their marriage, but the other spouse contributed to keeping and maintaining the business.
Business valuation for the purposes of property division can also be a challenge. Most businesses control both tangible and intangible assets. While tangible assets like cash on hand, accounts receivable, physical inventory, real estate ownership, and equipment are relatively easy to assess, intangible assets such as goodwill, patents, trademarks, business development skills, and professional relationships are more subjective and contentious.
Business valuation can be further complicated in various ways. For example, the value of a particular asset can depend on current market trends in the business’s industry sector. The actual value of the business itself can also be up for debate. Simply measuring the value of assets compared to the business’s total liabilities is often insufficient to accurately value a business in Rancho Santa Fe.
How to Divide Your Business in a Rancho Santa Fe Divorce
After completing the process of characterizing and valuing all of the property in your divorce, the actual process of dividing the property can unfold in various ways. Whether you wish to keep control of your business is an entirely personal decision. Some divorcing business owners will want to start completely fresh, while others will be unwilling to part with a business to which they have devoted so much time, money, and effort.
Your Rancho Santa Fe business division in divorce lawyer at Neumann Family Law, A.P.C., can help you understand your options for resolving this aspect of your dissolution:
- One spouse may offer to buy out the other spouse’s share of the business and assume sole ownership. If you wish to pursue this option, remember that you will be assuming responsibility for the business’s debts as well. It is also possible for one spouse to offer other elements of community property to account for half of the business’s total value.
- The spouses may decide to sell or liquidate the business and divide the proceeds. They will need to settle all of the business’s outstanding debts, and then the remaining proceeds will be evenly split between them.
- The spouses may decide to continue operating the business as co-owners. This will typically require new business organization documents and contracts.
These are just a few possibilities. A Rancho Santa Fe business division in divorce lawyer can explain your most viable options so you can make an informed decision for handling this aspect of your divorce case.
How Your Rancho Santa Fe Business Division in Divorce Lawyer Can Help
You can rely on the team at Neumann Family Law, A.P.C., to provide a full scope of legal services for the business division in your divorce. We take time to listen to each client’s story and carefully evaluate the details of their situation. We understand that business ownership in California can be both rewarding and challenging, especially when your divorce will affect your business.
It’s important to consult an attorney you trust right away once you have decided to end your marriage. If you are ready to learn how an experienced Rancho Santa Fe business division lawyer can assist with your case, contact Neumann Family Law, A.P.C., today to schedule a consultation with our team.
*CFLS = Certified Family Law Specialist by the State Bar of California Board of Legal Specialization
