In California, most property acquired during the marriage is considered community property, which means both spouses have equal rights to it—even if only one person’s name is on the title or registration. This includes businesses that were started, acquired, or built during the marriage. If a business was started before the marriage but grew in value during the marriage, the increase in value may be treated as shared property.
Things can become even more complex if the couple worked together or if family members were involved in the business. Also, if one spouse owned the business and the other supported it through unpaid work, that contribution may also factor into the division.
Divorce and business ownership don’t mix well without the right legal strategy. An experienced divorce for business owners lawyer can help keep your rights and business intact.
Before anything can be divided, it’s important to determine who actually owns the business—and what share of it is considered part of the marital estate. This process can be straightforward in cases where only one spouse is involved. But in situations where both spouses are active in the business, or where ownership is shared with business partners, determining who controls what can be more difficult.
If the business is a limited liability company (LLC), partnership, sole proprietorship, or family corporation, the legal structure will impact how it is divided. Some businesses also have buy-sell agreements or partnership contracts that outline what happens in the event of a divorce. These documents can help, but they may not override California’s community property laws.
A skilled business divorce attorney in Los Angeles can review your situation and help clarify what’s considered separate versus shared.
One of the most important steps in a business divorce is determining how much the business is worth. This process is called business valuation, and it plays a major role in how a court or settlement divides property.
In many cases, a professional business appraiser or forensic accountant will need to be hired. It’s important to work with someone who understands not just business numbers, but how they apply in a divorce setting.
If the value is calculated incorrectly, one spouse may walk away with less than they deserve—or more than they should.
There are several ways to calculate the value of a business. The court may use:
Businesses often carry debt, especially those that are newer or in growth stages. During divorce, both assets and liabilities must be divided. Just like profits and equipment, business debts are subject to review. If the debt was taken on during the marriage, it may be considered community debt, even if it’s only under one spouse’s name.
In some cases, a spouse may have personally guaranteed a business loan or used joint property as collateral. These financial risks must be carefully evaluated to ensure that both spouses are treated fairly. Limited liability protections don’t always shield individual spouses when divorce enters the picture.
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There are a few ways a business asset division in California can work during a divorce:
This is the most common outcome. One person keeps the business and pays the other their share, either in cash or through other assets.
If neither spouse wants to continue running the business, they may sell it and divide the proceeds, usually split equally if it’s considered community property. This option can be more disruptive but may be the cleanest resolution in contentious cases.
Although rare, some divorcing couples choose to maintain joint ownership of the business. This option may work for family businesses or companies with clear boundaries between personal and professional life.
Whatever the outcome, it’s important to document everything in a settlement or court order. This protects both spouses and keeps the business running without added stress or confusion.
At Atighechi Law Group, we help business owners explore all available options and craft a plan that protects their interests long after the divorce is final.
Business owners face unique risks during divorce. Without the right legal help, you could lose control of your business, see its value drop, or end up paying more than your fair share. An experienced business divorce lawyer knows how to protect your rights and your company.
At Atighechi Law Group, we combine deep knowledge of family law, property division, alimony, and California business practices to help our clients navigate divorce successfully. We understand the stakes—and we know how to work with business valuators, accountants, and other experts to secure the best possible outcome. Our Los Angeles divorce lawyers are ready to answer your questions.
Yes, they might be able to. In California, even if one spouse wasn’t directly involved in running the business, the value of the business may still be considered community property if it grew during the marriage. Courts may also consider indirect contributions, such as supporting the household while the other spouse focused on the business.
Possibly, but it depends on several factors. A business started before marriage is typically considered separate property. However, if the business increased in value during the marriage or marital funds were used to support it, that increase may be subject to division. A lawyer can help determine what portion, if any, is considered shared.
If there’s a dispute over the business’s value, the court may appoint a neutral valuation expert or consider competing valuations from both sides. Accurate valuation is critical, so it’s important to work with a lawyer who can bring in the right financial professionals and advocate for a fair outcome.
Not necessarily. Selling is one option, but it’s often a last resort. Many divorcing business owners choose a buyout structure, where one spouse keeps the business and compensates the other. In some cases, both parties agree to continue co-owning the business, though this arrangement can be complex and requires careful planning.
A business divorce attorney can help assess what part of the business is marital property, ensure proper valuation, negotiate a fair division, and protect your control and ownership rights. They’ll also review legal documents like partnership agreements to see how divorce impacts your business structure and obligations.