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Business divorce: Things to know re community property laws

It often takes years to bring a business dream to fruition. In fact, some California business owners say they actually began thinking of their plans in their youth, then spent years fine-tuning and crafting a more definite course of action. Finally, for those who can accomplish their goals, a day arrives when a business dream becomes an official company and (hopefully) starts turning a profit. Years later, after marriage, the birth of children and other life experiences, it can come as a tough blow to realize relationship problems have prompted a business divorce.

When a business owner files a petition or is served papers for divorce, it is logical to assume that his or her company interests will be a main focus and priority of proceedings. California is one of only nine community property states in the nation. This means property division proceedings typically include dividing all marital assets and debt 50/50 between spouses.  In this example, the business owner, who developed the business before marriage, likely has a separate property interest.

Of course, the best way to ensure that a business will not be subject to property division in divorce is to sign a prenuptial agreement before the marriage takes place. While some people hesitate to do this because they think it unromantic, most business owners understand the importance of securing their assets in case the relationship does not last a lifetime. If there is no prenup in place, things can get rather messy in court.

A business divorce can be complex, especially if only one spouse has a vested interest in a particular company. Many spouses co-own their businesses, however, and work alongside each other to keep their companies afloat. In either case, it pays to enlist support from an experienced California attorney when divorce and business issues intersect.



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