For most people, business is just business. For some California couples, being in business together can seem like a natural extension of their personal relationship. When divorce rears its head, things can become complicated.
Many things will contribute to the way in which a business may be viewed during the division of assets. If the business was started or owned by one spouse prior to marriage, this may give that spouse a stronger claim to the asset. However, this may be balanced by the level of input that the other spouse has had in the business since becoming a part of it. Also, being a partner in a business is not necessarily the same as being an owner, whether wholly or partially.
It is possible for a spouse who is a partner in a business to end up as a co-owner as part of the divorce settlement. There may be avenues that one can explore in order to avoid having to go down that road, depending on how the business is incorporated. Clearly documenting the level of contribution made — or not, as the case may be — by each spouse can help to provide a clearer picture of the amount of recompense to which one may be entitled. Contribution may be in a variety of forms, from socializing with clients or working unofficially through to generating ideas or actively running the business in some way.
Whether California residents are acting to protect their assets, or to obtain a fair divorce settlement, seeking the appropriate advice is important when dealing with the division of business assets. Good record-keeping and clear documentation will assist greatly at all stages. With the right tools and advice, one may move into the future in a positive manner.
Source: inc.com, “How to Protect Your Business in Divorce“, Entrepreneurs’ Organization, May 26, 2017