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Divorce can impact what happens to one’s business in California

On Behalf of | Mar 6, 2014 | Divorce |

People may feel as though their world is turned upside down when they get a divorce. Not only do they have to part ways with their spouse, but also they may incur financial losses for which they were not prepared. This is especially true for someone who owns a business, which may be viewed as community property during a divorce proceeding in California. Even if the couple never executed a prenuptial or postnuptial agreement, an individual can still take a few steps to properly address his or her business.

First, it is wise to get an independent valuation of the business. Then, a person can use other assets to buy the spouse out of his or her share of the enterprise, since the business would be considered community property that they own together. A payment plan based on the business’ future earnings can be put together to achieve this.

This actually may motivate the individual to make his or her business grow more than ever before. Another way to buy out a spouse’s marital share of the company is to borrow against a whole life insurance policy or another type of collateral. The goal is to finally break ties with the ex-spouse so that one can freely run and benefit from his or her business long-term.

In California, which is a community property state, both parties equally own what either of them has acquired since they were married. Still, the negotiation process may enable both individuals to facilitate the division of assets on their own terms during divorce proceedings. Both have the right to seek a favorable solution that is fair and adequately represents their own interests.

Source:, How to divorce-proof your business, Rosemary Frank, March 2, 2014


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