Law Offices of Indu Srivastav, APLC
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How will you divide your business in divorce?

Over the years, you and your spouse chased after dreams of creating your own business. That dream may have become reality, but now you aren’t sure how your divorce will affect the company.

California is a community property state, meaning that a judge will equally divide any assets you acquired during marriage, including starting or growing your business. However, this does not automatically mean that you have to sell the business if you don’t want to.

There are three main options for small business owners in divorce:

  1. Both of you own and operate the business. This is often the choice in amicable divorces because it offers several benefits. Mainly, your divorce would not affect your business and you can skip the lengthy process of dividing its value. The drawback is that emotions between you and your ex-spouse could creep into business decisions in the future.
  2. One of you owns the business and the other sells their share. When one spouse is more attached to the business than the other, this option could benefit both parties. In exchange for keeping the company, the owner would have to buy their ex-spouse’s portion. This can be quite expensive depending on the value of the business. Many people can’t afford to pay their partner’s share as a lump sum. Instead, some choose to sacrifice other assets of equal value.
  3. Both of you agree to sell the business and split its value. While many business owners might feel a major sense of loss at the idea of selling their treasured business, it can be the best and simplest option in some divorce cases. However, selling a business is not usually an easy task.

Of course, these are only ways to split your company if it was created during marriage. If you already owned the business or you inherited it from family, for example, this process becomes more complicated. A prenuptial agreement may help, but ultimately a judge will determine how to value your business unless you decide to settle out of court. In either case, consult an experienced attorney to guide you through the division of marital assets, including your family business.

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Law Offices of Indu Srivastav, APLC
1400 N. Harbor Blvd., Suite 601
Fullerton, CA 92835

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