Protection of Business Interests

Upon entering into a marriage, all property earnings and debts from the date of the marriage are community property. The divorce process requires couples to divide all assets and debt equally.

One of the most contentious areas in a divorce can be the protections of one’s business interests. Both spouses need to be compensated for any community property interest they may have in a business.

Often, a forensic accountant or other professional is hired or appointed if a business is owned by a spouse. This allows for personal expenses being run through the business and other benefits that should be considered as income to be identified and considered by the courts.

• Will the court force me to sell my business?
  Typically the court will not force the sale of a business to effectuate a buyout. It wants you to be able to continue to earn income.
• What about my business partner(s)?
  Often businesses will have a legally binding plan that deals with such contingencies. However, if no plan is in place, the courts typically recognize that making a spouse a partner in a business that they have never had a part of is not a good idea. Usually, a buyout or equalization of assets is agreed upon so that the business can continue to run during and after the divorce.
• Can my spouse destroy the business to be vindictive?
  If you think your spouse is purposefully destroying the business, you can take action by asking the court for a restraining order or other resistance orders. In addition you can ask for a business manager (“receiver”) to be appointed to run the business (oversee operation, collect profits and distribute income).
• Can my spouse depress salaries or withhold distributions so as to pay less in support?
  Often a forensic accountant and/or other professional is hired or appointed if a business is owned by a spouse. This allows for personal expenses being run through the business, and other benefits that should be considered as income and purposeful decrease of salaries or distributions to be identified and considered by the courts.