--- title: "Protecting Your Business in Divorce | Norman Dowler LLP" description: "When you own your own business, you know that it plays a key role in your livelihood. You may have invested years of time and perhaps even several of your…" lang: en json-ld: | { "@context": "https://schema.org", "@type": "BreadcrumbList", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://normandowler.com/" }, { "@type": "ListItem", "position": 2, "name": "Resources", "item": "https://normandowler.com/resources" }, { "@type": "ListItem", "position": 3, "name": "Taking Care of Business During Your Divorce", "item": "https://normandowler.com/blog/taking-care-of-business-during-your-divorce" } ] } --- [Skip to main content](#main-content) Call Us: [(805) 654-0911](tel:805-654-0911) Monday - Friday | 8:30 AM to 5:00 PM [](/) Practice Areas[About Us](/about)[Attorneys](/attorneys)[Blog](/resources)[Contacts](/contact) [(805) 654-0911 ](tel:805-654-0911) [Back to Resources](/resources) Employment Law April 1, 2019 # Taking Care of Business During Your Divorce When you own your own business, you know that it plays a key role in your livelihood. You may have invested years of time and perhaps even several of your own paychecks into its growth. It's no surprise that a divorce could make you feel like your whole world is at stake. While every business and divorce is different, here are some things that will be considered in how a business will be divided during a divorce: ## Ownership If you owned the business before your marriage, it's more likely to be viewed as individual rather than martial property. However, if your spouse contributed to the business during the marriage then it may be determined that they deserve a share of the ownership. This could be as obvious as being on the payroll, owning shares, or investing, but it could also be something subtler. For example, if you took from shared bank accounts to cover business costs or reinvested all of your profits back into the business, your ex-spouse may successfully argue that they deserve a cut of the appreciated value of the business since martial assets were contributed. ## Prenuptials/Premarital Agreements Since California is a community property state, your ex-spouse may have a right to the appreciation of value of the business if you did not keep your business expenses separate from martial funds. The best way to ensure that your business remains yours during a divorce is to have a comprehensive prenup/premarital agreement where your spouse waives any claim to the business now and in the future—even if it appreciates in value. ## Type of Business If you established your business as an LLC, trust, or corporation, it is much more protected in a divorce because it exists as a separate legal entity. Running a business as a sole proprietorship may make things more complicated because it's likely enmeshed with your personal and martial assets. ## Documentation and Separation If you do not have a prenup and did not establish your business as a separate entity, do as much as you can leading up to your divorce to keep your business expenses separate from joint funds. Obtain and keep careful documentation of where your business funds come and where they went. Be sure to also document your spouses' lack of involvement in your business, to defend your claim that your business is truly your separate property. Frequently your spouse's lawyer will want the court to calculate all of the business income as your income. If your spouse is claiming that the business is community property, you might be put in a situation where support out of income that is community property, and then later will have to pay it again as distribution of the profits of your business. This is "double dipping" because your income comes from the same source. ## Value What your business means to you personally may differ from its market value as an asset. It's important to have your business valued by a professional third party to determine how much it's really worth financially. You may have the opportunity to trade other assets to your spouse in exchange for your business. Although California is a community property state, this doesn't mean that every asset needs to be divided equally. So long as each spouse comes out of the process with assets that are determined equal in value, the division is considered acceptable. Your ex-spouse may have absolutely no interest in running or taking shares of a business and may prefer to instead take a vacation home, car, or bank account. Your best chance to retain your business intact is to be amicable with your ex-spouse and provide options to match their share of the value. Just like any other asset, a business has economic value that should be divided in a way that's perceived to be equal by both parties. If you need help navigating through the complexities of divorce and property division, contact our seasoned family law attorneys at Norman Dowler LLP. We specialize in family law in Ventura, Santa Barbara, and Los Angeles Counties. ### Need Legal Assistance? Our experienced attorneys are here to help you navigate your legal matters. [Contact Us](/contact) ### Questions About This Topic? Contact our team for personalized legal guidance. [Contact Us](/contact) ## More Legal Insights Family Law • June 17, 2019 ### [Reasons You May Say "I Don't" to a Divorce](/blog/reasons-you-may-say-i-dont-to-a-divorce) Maybe you and your spouse were going through a temporary rough patch. Perhaps neither of you truly meant it when you decided to go your separate ways. What if the word "divorce" was just used in the heat of the moment? [Read More](/blog/reasons-you-may-say-i-dont-to-a-divorce) Family Law • May 28, 2019 ### [Navigating Your Separation During the Summer Months: Co-parenting Tips](/blog/navigating-your-separation-during-the-summer-months-co-parenting-tips) With summer heating up and school soon to come to a close, you can expect to see your kids a lot more often in the upcoming months – at least when they're at your place. [Read More](/blog/navigating-your-separation-during-the-summer-months-co-parenting-tips) Mediation • March 4, 2019 ### [How Mediation Can Save Time and Money](/blog/how-mediation-can-save-time-and-money) Divorce can be a harrowing process that can last for months or years and cost thousands of dollars. It can be emotionally taxing on both parties, and also have an adverse effect on your children. 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