How will a divorce settlement be determined when a jointly owned business is involved?

UPDATED: May 31, 2011

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How will a divorce settlement be determined when a jointly owned business is involved?

Married 5 years. Quit my job to help his business grow. I own 30%; he owns 70%. I have received a paycheck from our business for 3 years. I have increased his business income by about 300%. Company owns a condo in CA, the business office is there and in FL. No children together (I have one from prior relationship). He has been accused of sexual harassment twice now and I want divorce. What will be the financial details?

Asked on May 31, 2011 under Family Law, California


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

There will not be any child support in this situation.

Since California is a community property state, the majority of property acquired during marriage will generally be split 50-50.

In terms of the business, the baseline is that you would own 30% of it--your ownership stake. However, it may be possible in the divorce to show that you should have a larger share, to reflect contributions or sacrifices you made to grow the company. This is something to discuss with your divorce attorney, but assume that, based on the evidence you can muster and the contributions you made, that you will end up being able to establish ownership of 30% - 50% of the business.

Valuing the business, of course, is a trick in and of itself, if its a small, illiquid business. Still, the fact that the company at least seems to own some real property creates a baseline for valuation.

You may be able to also get some spousal maintenance or support, given that while you had a job, it was from the business--e.g. not an independent source of income.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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