How Does The Value Of Your Business Affect Your Divorce?

Stephanie L. Mahdavi Divorce

Business assets can be divided in one of two ways during a divorce: the couples can reach an amicable arrangement, or the judge can make the decision on how the business assets and control are divided. The first choice is usually the better of the two, but it is not always possible for the spouses to agree on who would receive all or part of the assets and liabilities of a business during divorce procedures.

California divorce and business ownership can be difficult problem to negotiate and necessitates the assistance of an experienced attorney. If you are going through a divorce and one or both spouses have control of a business, contact the family law attorneys at the Law Offices of Stephanie L. Mahdavi. We can help determine the value of your business and reach a favorable outcome in your divorce.

Figuring Out the Value of Your Business

The first step is to figure out the value of your business. A hired certified public accountant can examine the company’s financial records, including debts, assets, liabilities, and other documentation, to evaluate the company’s total worth. An impartial third-party vendor will be able to determine the total value of your business.

Once a value is given to your business, a judge will weigh in before a final determination is made. The California court must follow IRS Revenue Ruling 59-60 when reviewing a business valuation in a divorce case. The factors given in the ruling include:

  • Business History
  • Nature of the business
  • Economic outlook
  • Condition of the business and its operations
  • Business earnings
  • Dividends
  • Prior sales, mergers, or ownership interests
  • If it is a publicly-traded company or a private company

The third-party valuation of your business will not always be the exact number used at the final divorce proceedings. There are various laws in California that require a judge to weigh a series of factors before making a final decision in divorce cases.

Does Your Spouse Have a Right to Your Business After a Divorce?

Since California is a community property state, the business’s value will be established, and each spouse will be entitled to half of the assets. After the divorce is finalized, who gets control of the business depends on who was running the company¬†and how involved the other spouse was.

Your spouse may be regarded as involved in the business if they do not have other employment, have the ability to sign contracts, and their name is on the registration documents. If you own the company but your spouse is on the payroll, the courts will assume that your spouse is an employee. If you are the driving force behind the company’s success, you may need to demonstrate this to a judge in order to maintain control.

Contact Stephanie Mahdavi to Discuss Your Case

If you are going through a divorce that involves a business valuation, contact the Law Offices of Stephanie L. Mahadavi. Our experienced Westlake Village divorce attorneys are here to help you.

We have two decades of experience and have the legal understanding to procure the results that protect your future. To schedule a meeting with a Westlake Village divorce attorney, please call 805-379-4550 or complete the online form.

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