Divorce Considerations For Business Owners
Anyone in the San Jose area who is planning for a divorce and owns a business should know that there are a wide range of important considerations for business owners in California divorce cases. While businesses will be classified and divided (where appropriate) like other types of property in a California divorce, there are specific issues that tend to come up in cases where one or both of the spouses owns a business. Are you a business owner who is thinking about divorce? The following are some essential divorce considerations for business owners that you should be taking into account as you plan for your case.
Business Assets and Debts Can Be Classified as Separate or Community Property
First, you should know that business assets and debts in a California divorce can be classified as either separate or community property. If a business (or a portion of a business) is classified as community property, then it will be divided equally between the spouses in the divorce case.
It is important to know that businesses can be classified as community property even if they are run by just one of the spouses, and even if the other spouse has not had anything to do with the business in obvious ways. Unless the business has been expressly excluded from property division through an enforceable prenuptial agreement, any business assets or debts that were acquired or accrued after the date of marriage are likely to be classified as community property and subject to division. Even in circumstances where one of the spouses is in a partnership with other parties (i.e., not the other spouse), or a member in a limited liability company (LLC), the business assets owned by the spouse who is the business owner can be classified as community property.
Buying Out a Spouse and Handling Complex Business Issues in a Divorce
When a business is classified as community property, what are your options? If one of the spouses owns a business as a sole proprietor, it may be possible to sell the business and split the assets or buy out the other spouse’s interest. It may also be possible to negotiate and to reach an agreement about how community property will be divided such that the business owner spouse gives up other assets in order to retain control of the business.
These issues and options can become more immediate and essential in circumstances where one of the spouses owns a business with other people. If one of the spouses is a partner in a partnership, or a member of an LLC, the business cannot simply be sold so that the business owner spouse’s interest in the business can be divided between the spouses. Instead, it will likely be necessary to consider options for buying out the other spouse’s interest in the business so that the business can continue operating and the other owners will not be impacted by the divorce.
Contact a Divorce Lawyer in San Jose
Anyone who requires assistance with business assets in a divorce should get in touch with one of the experienced San Jose property division attorneys at Foster Hsu, LLP today.