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Businesses and divorce in California

If California residents own a business, especially if they started it before they were married, they may assume that the organization is automatically going to be awarded to them during a divorce. However, the reality is that since a business is an asset with value, it is considered a marital asset, so the owner's spouse has a claim on at least part of it.

The good news is that most judges will not order the sale of an organization or a partial liquidation, especially if a business is key to family income. However, a court may award a spouse an interest in a business. Alternatively, someone may keep all of a business but receive a smaller portion of other marital assets that their spouse.

Along with understanding that business interests are not exclusively one person's, people should also be aware that it is important to not appear as they are attempting to hide assets or lower the apparent value of the organization. Doing so an provoke a negative reaction from a judge, who may believe someone is attempting to do something unethical or even illegal.

A business owner who is facing the end of a marriage may find it advisable to consult with a family law attorney at the outset of the process. As California is a community property state, marital assets will be divided equally by a judge during the property division stage unless the parties have been able to come to an agreement. In many cases, it may be preferable to negotiate a settlement agreement rather than leaving that decision in the hands of the court.

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