By Ilana Plotkin Schauer, Partner / Head of Litigation
And Andy Schauer, Partner / Head of Transaction Law & Estate Planning
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Community Property vs. Separate Property: In California, community property laws govern the division of assets during a marital dissolution. Community property generally includes assets acquired by either spouse during the marriage, while separate property encompasses assets acquired before the marriage, through inheritance or gifts. However, it is crucial to note that certain circumstances can blur the lines between community and separate property, especially when it comes to corporations and LLCs. -
Community Interest in a Corporation or LLC: If a corporation or LLC was formed or acquired during the marriage, it is typically considered community property. Even if only one spouse is actively involved in the business, the other spouse may still have a community interest in it. This means that the value and assets of the corporation or LLC are subject to division during a marital dissolution, unless a prenuptial or postnuptial agreement states otherwise. -
Valuation of the Corporation or LLC: Determining the value of a corporation or LLC is a crucial step in the division process. Valuation methods such as market analysis, book value assessment, or the use of financial experts can help assign a fair value to the business. The court may consider various factors, including the company's assets, liabilities, income, market conditions, and future prospects. Valuation can be a complex task, often requiring the expertise of professionals specializing in business valuation. -
Division Options: When it comes to dividing a corporation or LLC, there are several options available, depending on the circumstances and the couple's preferences:
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Protecting Your Interests: Navigating the division of a corporation or LLC during a marital dissolution can be complex and emotionally charged. It is crucial to seek the guidance of experienced family law attorneys who specialize in business matters. An attorney can help protect your interests, negotiate fair settlements, and ensure compliance with California's legal requirements.