Business Asset Division in Divorce Explained
During your divorce, you may be concerned with how your business may be divided up between yourself and your spouse. Ensuring that your business stays whole and in your hands may be one of your top priorities during the division of assets process. But what happens when your business has assets of its own?
What Is Determination of Ownership?
Your business will first undergo a determination process to identify if it will be considered community or separate property and if it will need to undergo the division of property process. From there, the business’s own assets will translate to that ownership classification as those assets will be included in the evaluation of the business to determine its monetary worth.
During this determination of ownership, you may want to have a third party evaluate the monetary value of your business so you know what you can expect in the division of property and in the court’s valuation ruling.
Have more questions about how business assets are divided in your divorce? Call (951) 418-2770 or contact us online today to get started on your case.
Where Do Business-Owned Equipment and Vehicles Factor In?
Since business-owned equipment and vehicles are considered business assets, they will be lumped together with your business during the division of assets.
These assets can include:
- Company cars
- Manufacturing equipment
- Or technology such as computers and servers
This is due to your business relying on these assets for smooth operation.
Gather the Necessary Documentation
When the court evaluates your business and its ownership, you may need to prove that your business’s assets are in fact owned by your business and not yourself. You should have documentation regarding the purchase and upkeep of your business’s equipment and vehicles readily available for the court and your attorney to review.
This documentation may include:
- Receipt of purchase with company credit card or accounts
- Title of ownership for company vehicles
- Registration of warranties
- Financial statements regarding purchases or subscriptions for equipment
- Or any other documentation that lists the business as the owner of the property
Having this information readily available can expedite the process of the evaluation of assets and can act as evidence of ownership if your spouse objects to your business owning certain assets.
Separate Property Determination
If your business is determined to be separate property by the courts, then your business and its assets will solely be yours. This means that you will also retain ownership of company cars, equipment, and other assets to ensure your business operates at its initial capacity.
Community Property Negotiations
If your business is determined to be community property in your divorce, you may need to undergo negotiations during your divorce to ensure that you will retain sole ownership of the business and its assets if you were the sole owner and operator of the business prior to the divorce.
These negotiations can be done through your attorneys or through mediation, where both parties meet to discuss how to create resolutions for divorce issues.
What Happens During Mediation?
During your discussions with your spouse, express your interest in keeping your business whole and not splitting up assets. To keep sole ownership of your business and its assets, you may need to give up something of equal value, as California does divide assets 50/50.
You can also opt to take on more debt during the property division process to show your commitment to your choice of advocating for your ownership of your company.
The Importance of Reasonable Expectations in Business Asset Division
When negotiating terms for ownership of your business, you should make reasonable expectations of what you will accept giving up in exchange for full ownership of your business. Think about the business valuation and try to decide if it is worth it to give up any potential leverage for the family home or other assets from your marriage.
Murrieta Divorce Lawyer Offering Individualized Attention
Divorce can be complex, especially when your assets have assets of your own. Our divorce attorney at Law Offices of Michael D. Iverson, APC can help you as you prepare your business for your divorce. We will fight for your best interests and for your business to be whole when your divorce finalizes.
Are you a business owner considering a divorce? Call us today at (951) 418-2770 or contact us online to schedule a free initial consultation.