Will I Lose Ownership of My Business When I Divorce?

Many issues can affect the outcome of business ownership interests in a divorce. Rancho Cucamonga property division attorney Taylor B. Warner represents spouses on both sides of this issue. We’ll explore why and how this can happen, how it may be avoided, and how the property division Law Office of Taylor B. Warner can help.

The Law Office of Taylor B. Warner, APLC’s Rancho Cucamonga property division lawyers will protect your rights and work toward the best possible outcome for you and your family. Call us today at (909) 466-5575 or complete our contact form to schedule an initial consultation and get the legal representation you need.

Separate and Community Property

California law divides property into separate (it belongs to the individual) and community (it’s owned jointly by the spouses) when it comes to division during a divorce. The line between the two is often blurred, and an effective Rancho Cucamonga property division attorney may be the difference in your case’s outcome. Those terms generally mean the following:

• Community: What you earn, buy, own, or owe together during your marriage. The two of you own this property equally
• Separate: What you own or owe individually before your marriage or after your separation, plus any gifts or inheritance during the marriage (unless they are co-mingled with community property)

Separate property can be converted to community property. However, to remain separate, property must not be used by your spouse or jointly while married.

Property can be partly community and separate, known as commingling because separate and community property became mixed. This can happen when you make a major purchase, like a house, or both of you buy or invest in a business. If one of you used separate, pre-marriage savings to start a business, but the two of you contributed to it after it started, business ownership would be a mix of separate and community property.

Most couples resolve their differences through negotiation and come up with an agreement, which the judge must approve. If the case goes to trial, generally, the judge would order that the two of you keep your separate property and equally divide your community property.

Protect Your Business

Divorcing business owners often comes under a lot of scrutiny because of the potential of using the business to hide or transfer assets so that they appear to have fewer assets than they do. You should not take this route because there’s a very good chance this will be discovered. A judge will not take this lightly, and you risk losing more than you would if you acted honestly and transparently.

If you’re thinking of getting married or are married and own a business, ideally, you will be proactive and agree with your future or current spouse about how your business will be handled if you divorce. This would be part of a premarital or postmarital agreement that spells out who will get what assets and debts if you divorce.

If you want to take your business off the property division table through an agreement, expect to make it worth your spouse’s while by offering something they would not otherwise be entitled to get through the divorce. That may be a sum of cash, another asset, or taking on a debt you usually would not need to pay. Trading one thing for another is what good faith negotiation is all about.

If no such agreement was made, and it’s time to negotiate a divorce resolution, you should take the same approach. You need to give something to get something, like full ownership of your business. You may need to sacrifice your interests in your community property, like equity in your house, a vehicle, or some of your savings.

If you can’t reach an agreement and the case goes to a trial, you’ll need to argue that your business ownership is separate property or that very little is commingled property. How successful that argument may be depends on the evidence.

Perhaps the two of you had your own businesses, and you kept everything divided up. Usually, family-owned businesses are a team effort. What’s more likely is your spouse invested in your business, putting their money, time, and energy into it instead of something else, like home improvements or retirement savings.

Contact a Property Division Attorney Today

What happens to a family-owned business in a divorce can be a highly charged dispute. But it does not need to be that way with some planning. If that’s not done, negotiations that take everyone’s interests in mind should resolve the issue

Reach out to the property division Law Office of Taylor B. Warner today to discuss your property division concerns, including issues that can arise with a family business. Call a Rancho Cucamonga property division lawyer at 909-466-5575 or fill out our online contact form to schedule a consultation so we can talk about your plans, goals, and potential obstacles.

Taylor Warner

Taylor has always been an advocate. Growing up the middle child with an older and a younger brother, Taylor developed a strong voice and personality and has always felt strongly about helping others. Becoming a lawyer seemed to fit Taylor’s personality and character – she is a strong leader and a bold advocate. Learn more here.