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How to divide a business in a divorce

On Behalf of | Nov 21, 2017 | Divorce

When a California business owner gets divorced, it is important to know exactly how much the company is worth. This is because it may be divided in the divorce settlement. How it is divided may depend on the structure of the business; it may be necessary to buy out a spouse if he or she is a partner in the company. Even if the business is run as a sole proprietorship, a spouse may be entitled to a portion of its value.

It may be beneficial to have an outside party perform the valuation. This person will calculate the worth of equipment such as computers, land or buildings that the business owns. He or she will also create a tangible value for intangible assets such as brand recognition and goodwill. Having a neutral party conduct the valuation may prevent a spouse from manipulating company finances to avoid paying its true value in a divorce.

After creating a valuation, it is time to determine how to split it. A judge may take many items into account such as who spent more time running the company or whether it was started before or during the marriage. It will also need to be determined whether the company will actually be liquidated to meet the terms of a divorce settlement.

In cases where a couple may have assets like a business, dividing marital property may not be a straightforward one. How an asset such as a company is divided may depend on its value and how it could impact employees, vendors or other interested parties. An attorney may be able to find accountants and other financial professionals to help resolve this issue. This may help an individual obtain a favorable settlement in a timely manner.