How is Ownership Interest in a Family Business Calculated?

Previously we've discussed how the family residence can be divided in a divorce, but what about the family business?

Since California is a community property state, in most cases anything acquired or started during the marriage would belong to both parties. Like the family residence, there could be a separate property claim and there is a possibility that the business could be a combination of both separate and community property.

Family Business

When meeting with your experienced family law attorney it is important that you have an accurate timeline of what has occurred with the business and descriptions of each party's roles and responsibilities within the business. Usually it is best to determine the valuation date of the business as of the date of separation of both parties. This way, if one party takes actions to destroy the business, or alternatively if one party puts more money/effort in the the business causing it to do better, the other party isn't unfairly punished and/or rewarded.

On the occasion that the business was owned by one party prior to the marriage, a second valuation date, the date of the marriage, may be necessary to determine the amount of separate property interest, if any, in the family business.

As with a divorce involving a family residence, and/or other large piece of property, it is recommended that each party consult with an expert family law attorney. Too often parties may decide to split community assets on their own and either one party is disadvantaged or the parties ultimately end up hiring attorneys and spend more than they would have if attorneys would have been involved from day one.

For more information on asset and property division, contact Richard Ross Associates today. With offices conveniently located in Westlake Village, Woodland Hills and Oxnard, we proudly serve both Ventura and Los Angeles Counties.

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