Effect of Divorce on
the name on the business or real property
is ONLY the beginning of the inquiry. The results are
often unexpected and sometimes devastating. Having good
legal advice is smart if you want to protect
your business or in obtaining your fair share - even if the business is held
in the name of only one spouse, and even if the business was started prior to the marriage. The
discussion here barely scratches the
surface of the legal and financial issues
that can arise with regard to your business
interests in a divorce.
the EVIDENCE shows that the business was
acquired or established with community
property during marriage, then the spouse's
ENTIRE interest is presumed to be community.
spouse who claims a separate property
interest in a business or practice must
PROVE that it was acquired or commenced
before marriage or from a separate property
source during marriage. If the court
finds that the business was separate property,
it must STILL determine to what extent
any of the interest, and any increase
in value and profits, should be apportioned
to the community estate.
general rule for dividing community property,
including a business, is to order an IN-KIND DIVISION, subject to several exceptions.
If the business is a community property
business, the court HAS THE DISCRETION to award the business
to only one spouse, if economic circumstances
so warrant. In determining the division
of community property, a court has discretion
under Family Code, section
2601 to make an award as follows:
economic circumstances warrant, the
court may award an asset of the community
estate to one party ON SUCH CONDITIONS AS THE COURT DEEMS PROPER
To effect a substantially equal division of
the community estate.
a community property asset is awarded
to one spouse, the court must award property,
or an amount, COMPARABLE IN VALUE to the
other spouse to make the division substantially
equal. In order to do so, the court
must first value the business before dividing
the community property.
Protects your Assets
more information you have about your business,
the more we can assist you. We will
need to know the answers to questions
such as these (and a lot more):
describe your job for the business.
products or services does the business
is the net profit at this time?
you the sole owner?
percentage interest do you own?
owns the rest, and what are their interests?
is the organizational structure of the
do the various components of that structure
interrelate with the others?
there portions that could be sold without
dissolving the rest?
there assets of the business that could
be sold without dissolving the entire
any transfer restrictions that exist with
respect to ownership interests in the
you subject to those transfer restrictions?
you sell part of the business, can it
continue to operate?
to Reimbursement of Separate Property
Used towards the Purchase of Community
Property or towards the Purchase of the
Separate Property of the Other Spouse.
the division of the community estate,
unless a party has made a written waiver
of the right to reimbursement or has signed
a writing that has the effect of a waiver,
the party MUST be reimbursed for the party's
contributions to the acquisition of the
property to the extent the party TRACES
THE CONTRIBUTIONS to a separate property
reimbursed will be without interest or
adjustment for change in monetary values
and MAY NOT EXCEED THE NET VALUE of the
property at the time of the division (i.e., at the time of trial).
to the acquisition of the property include
down payments, payments for improvements,
and payments that reduce the principal
of a loan used to finance the purchase
or improvement of the property but
DO NOT INCLUDE payments of interest on the
loan or payments made for maintenance,
insurance, or taxation of the property.
Family Code, section
the search engines: Many of our divorce
and legal separation clients seeking lawyers
with experience in family law, divorce,
child custody, child support, spousal
support, alimony, community property,
separate property, real property division, the division of businesses,
and restraining orders are drawn from
Pasadena, Arcadia, Monrovia, Temple City,
Bradbury, Sierra Madre, Duarte, and San
Marino, while others live in Azusa, San
Gabriel, Alhambra, Glendora, Baldwin Park,
Covina, and West Covina. We also attract
clients from throughout the Greater Los
Angeles area and the Inland Empire.
changing the character of property
from separate to community, or from
community to separate.
the general rule is that transmutations
must be in writing, the way the rules
operate for some businesses the law
essentially works a transmutation
from separate to community property
just from the normal operation of
the business during the marriage.
2004-2012. All Rights Reserved.