Divorce can affect California business owners differently than individuals who don't own a business. Knowing what to expect can help a business owner prepare for divorce. It is essential for business owners to consider both the short- and long-term impacts of divorce.
A business is different than many other marital assets in several ways because it may also be a primary source of income. Assets are normally divided in a divorce, but doing so when it comes to a business could cause the enterprise to become insolvent and result in lost earning power.
One major challenge that comes with dividing business assets is valuation. Allocating business assets to obtain favorable tax treatment could mean increasing the value of the company when it comes to division. A person who wants to keep a business will often need to buy out his or her spouse's share.
Another complicating factor is that for many small business owners, the difference between personal and business assets is often blurred. This can make property division in a divorce trickier when a business owner wants to keep their enterprise going.
Sometimes it is possible to offset business assets to be divided in divorce with other types of assets, such as life insurance. This can protect a business owner's interests as well as provide for children's futures.
A lawyer who has experience with handling divorces may assist business owners who are worried about how the end of their marriages may affect their livelihood. It may be possible to negotiate a settlement agreement that is fair to everyone involved. An attorney may help a business owner keep his or her business afloat by prioritizing the assets that he or she will keep in the divorce. If the other spouse is to receive alimony, this could potentially be a bargaining chip because the business will need to be sustained so that alimony can be paid.