During a dissolution, a business will be characterized as a community property business or separate property business. If the business was founded before the marriage or inherited by one spouse, then the business may be considered separate property. On the other hand, if the business was founded or acquired during the marriage, it will likely be considered community property and subject to division at dissolution. However, it is sometimes appropriate for the court to award a community property business to one spouse.
If it is not feasible for each spouse to receive an equal share of the business, there are several ways that the business can be divided between spouses in a divorce. When only one spouse operates the business, it may be appropriate for the court to award the business to the operating spouse rather than sell it to a third party. In addition, a business or professional practice that requires a license must be awarded to the spouse who holds the license. Although it is possible for a community property business to be awarded to one spouse, a sale of the business and division of the goodwill and proceeds may be the most economic and equitable approach.
If you are getting divorced and have significant business assets, get in touch with our property division attorneys in San Diego to learn more about your business options during the divorce proceedings.