Handling business ownership interests in divorce

When you and your spouse divorce and you own a California business together, you need to determine how to handle things moving forward. California is a community property state, which means that any business interests acquired during the marriage may be subject to a 50/50 split. However, there are several unique considerations involved in splitting ownership interests amid divorce.

The first step in dividing business ownership interests involves figuring out what the business is worth. Unless you agree on its value, you may need to have a business appraisal performed. You may want to do so anyway, as this may help protect you against over- or under-valuing it. Then, you may want to pick from one of the following common solutions.

Have one of you buy out the other

If one of you has hopes of continuing to operate the business without the other, that party may be able to buy out the other party’s business interests.

Sell the business

Another common solution involves the two of you selling the business and then splitting the money you make on the sale. This may be a particularly appealing option if you are nearing retirement. It may also appeal to you if both of you want to make a clean break from one another that involves severing most ties.

Buy-outs and business sales are among the more common methods of dividing business ownership interests in a divorce. However, they are not your only options. Depending on circumstances, you may decide to dissolve the business or continue to operate it together, among other potential solutions.

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