Is Your Small Business Separate or Community Property?
If you are going through a divorce, you might be wondering if your business is considered shared property. This question can have a big impact on your well-being during divorce since community property will often have to be sold or split up during a divorce. You might be earning your entire living from your business, and you probably do not want to share the company with your ex after the divorce.
Knowing more about how businesses are impacted by things like community property laws can help you figure out what to do about these assets during a divorce.
What is Separate Property vs. Community Property When it Comes to Businesses?
Businesses that are acquired before marriage are often considered to be separate property. Separate property will not be divided between spouses during a divorce. Businesses started or purchased by a married couple will almost always be considered community property and be divided between spouses during a divorce.
When the determination is made about which kind of business you own, there are steps that will have to be taken to determine what will happen to the business during the divorce. The first step will be getting a third party to provide value for the business. After this step is completed, the settlement process will open up the opportunity for the former spouses to talk about how to handle the business assets that they share.
Can You Buy Out a Business From Your Spouse?
In many cases, the spouse who does not want to keep the business will offer their share of the business for sale to the spouse who does want to keep the business open. If the price is affordable to the spouse who wants to keep the business, they can then buy out the spouse who wishes to sell. If the price is too high, the spouse who wants to keep their part of the business can usually also look for another partner to buy out the spouse who wants to be done with owning the business.
In some cases, the business will have to be sold to both parties. In these cases, each spouse will be compensated for the portion of the business that they owned, and then the business will no longer belong to either party. This can be the easiest solution if the two former spouses cannot come to an equitable sales compromise or if neither party can afford to buy out the other.
Businesses Can be Community Property in Some Cases
If you are worried that your business will have to be sold during your divorce, you might be trying to figure out how to come up with the money to buy out your spouse. You will need to be sure that you reach out to a skilled lawyer before you do anything else. Having the team at Jabro Law Group on your side can make a big difference in your ability to secure a fair and equitable purchase price for your business. Your business might also be separate property, and having a skilled lawyer can help you to sort out the legal status of your business that is impacted by a divorce.
