One of the reasons for your success might be your ability to plan for unexpected events that may impact your company’s health. As the co-owner of a successful business in California, you should think about how a divorce can affect your company. You may be happily married now, but you never know what the future holds.
It does not matter if your separation is an amicable one or not. You may even want to believe your partner would never do anything to hurt you or the company you own together. However, divorces often have a way of bringing out the worse in some people. It is important for you to make everything concerning your separation and company strictly business.
Creates challenges and delays
Spouses who work and own business’ together often do not structure them properly. They may even neglect to create partnership agreements and other documents most entrepreneurial individuals would. Not having the right documentation in place when divorce is on the table can lead to complications that can cause delays and more legal expenses when trying to sort things out.
Your partner may gain half of the business or assets
You may feel you do more than your fair share to keep the business going, but your spouse may also feel the same. Because you live in a community property state, the courts will split all past and future profits from your company. If you acquired the business before getting married, the courts must determine if your spouse made any contributions towards it during your marriage that may entitle him or her to some shares.
There are also other considerations, such as if your company became more valuable while you were married. If it did, then the increase may be subject to the rules of community property distribution if the judge deems it marital property. It is important for you to plan your divorce well in advance of filing. The right exit strategy can help you to protect your business.