Getting divorced while owning a business in Napa, CA presents unique obstacles. This is because, in addition to addressing the basic elements of a divorce, business owners often have to decide how to split their company. Between community property issues, general divorce laws, and complicated emotions, it’s important that you seek support from our family law firm.
At Hayes Family Law, we are qualified to handle the challenging legal issues that a divorce between business owners can present. Led by an exceptional certified family law specialist, our team works tirelessly to safeguard the rights of our clients in any case. We have first-hand experience in countless divorce cases involving businesses and are prepared to protect what you’re entitled to. Hayes Family Law is here to help business owners through their Napa divorce.
Every California divorce must address property division, spousal support, child custody, and child support. If you and your spouse own a business together, you will then have to deal with some additional issues regarding your company. Obstacles that you may face as a business owner going through a divorce in Napa can include:
Splitting Your Business and Its Assets
California is one of the few states that split marital property using community property laws. According to these guidelines, property that a couple collects during their legal marriage is classified as community property. Each spouse owns 50% of all their community property, which is why it has to be split evenly if a divorce ends up happening. This means that if a married couple decides to open a business together, this business would be classified as community property in the event of a divorce.
When a married couple who started a business together ends up divorcing, they will have to determine what method they believe is most optimal for dividing their rights. Splitting your business can be complicated, especially if one spouse is fighting for more rights than the other or is trying to be deceptive. The most common methods of splitting a business in a divorce include the following:
- Ownership is split equally by a judge or if two spouses can amicably agree.
- The business is sold, and the spouses split the profits.
- One spouse buys out the other party’s share in the business to give themselves sole ownership.
Keeping Up with Legal and Business Fees
Keeping a business alive is already challenging enough, let alone when you’re going through a divorce and have additional legal fees to pay. Unfortunately, many business owners struggle to keep up with their business and their divorce at the same time. Between the financial costs and stress that both bring, many business owners don’t know what steps to take. While a divorce can make things overwhelming, our team can work with you to come up with solutions that make you feel at ease.
The value of your business is based on a list of aspects, such as its assets and its revenue. When a couple divorces and their business is community property, they have to determine a fair way to split their business and their assets. To be able to split business assets, you’ll first need to decide how the business itself is being split. For example, if the business is being sold, you don’t need to worry about dividing the assets. If you are handing over ownership to just one spouse, you may still be entitled to business assets that you own 50% of. When dividing business assets, a judge may look at the following:
- How involved each person was in the business.
- If one spouse was considered the owner and the other spouse worked for them.
- If rights are being split between spouses or given to only one.
- If the business is being sold for profit.
- The potential revenue the business could bring in.
- The benefit of certain assets to a business.
How Can You Protect Your Business from a California Divorce?
There are multiple routes you can take to better protect your business from a potential divorce. If you created your business on your own, it’s smart to draft a prenup before you get married that states your business is your own separate property. This way, if your spouse attempted to claim that it was marital property, you have protection in a prenup clarifying otherwise.
Does a Business Always Close After a Divorce?
No. While many business owners find that selling their business is most beneficial to their situation, many others do what they can to keep their business operating. Selling your business is not your only option in a divorce. You can either attempt to buy out your spouse’s share for full ownership or ask the court to split ownership however they see fit.
What Is a Business Valuation?
In any divorce, a couple has to identify all of their marital property and have it valued. For business owners who are divorcing, they have to do this for their companies as well. This is known as a business valuation and helps both spouses and their attorneys to better understand how property should be split fairly. A business valuation should be done by a professional who can give an estimate closest to the real market value. This way, each spouse gets what they deserve.
Are Attorneys Required in Divorces Involving Businesses?
Even though in amicable divorces spouses may be able to make decisions without a judge or lawyer, it’s still crucial that you consult an experienced divorce attorney who can ensure you are making decisions in your favor. If your spouse gets an attorney, you will then be required to have one to make sure the case stays fair. Regardless of how contentious your divorce is, it’s smart to hire a family lawyer who can protect you and your business in a divorce.
Hayes Family Law has the skills and insight needed to represent our clients’ unique interests at all times. While a divorce can be daunting, our team knows how to navigate the property division process and protect your company. Contact Hayes Family Law if you’re a business owner in need of divorce assistance in Napa.