Article Source: Boyd Law, Orange County, CA
Orange County is a well-known area in Southern California with over 3 million residents. The county has a diverse economy, driven by industries such as tourism, tech, and real estate, and is home to a wide range of households, from affluent communities to middle-income families. With such a high number of people and their families, divorces are common.
When dealing with a divorce case, numerous aspects require attention and consideration, including dividing assets and determining ownership. The process focuses on separating assets and debts acquired during the marriage, which are considered marital property, and the things you owned or had before the marriage are usually separate and remain with you.
The divorce process is not easy; it takes a toll on your overall health. If you are planning to file or going through a divorce, hiring a family lawyer in Orange County could be a move that benefits you.
Understanding Marital vs. Separate Property
Marital property refers to any assets acquired by either spouse during the marriage, including income, real estate, investments, and debts. Separate property refers to assets that one spouse owned before marriage, as well as inheritances or gifts received by only one person, even if received during the marriage.
In such cases, the laws may vary from one state to another, and courts divide only marital property in a divorce. Knowing these rules in Orange County helps you understand what to expect during the divorce process.
Additionally, some states employ community property rules, which divide everything 50/50. In contrast, others utilize equitable distribution, where the court divides assets in a manner it deems fair, which may not necessarily result in equal distribution. In such cases, separate property can become marital if it is mixed with shared assets or used in conjunction with them.
How Is Business Ownership Handled in Divorce?
When a business is involved in a divorce, the court first decides if it is marital property or separate property. A company started or grown during the marriage is usually considered marital property, which means it can be divided between spouses.
Now, if one spouse owned the business before marriage, only its original value may be considered separate. However, any growth during the marriage could be split, and the contributions by either spouse, through work, money, or support, can impact whether some or all of the business is divided.
Valuing the Business: Assessing Profits and Interests
To value a business in a divorce, appraisers use methods such as the income approach, which estimates future income; the market approach, which involves comparing the sales of similar businesses; and the asset approach, which calculates the value of business assets minus liabilities.
A business appraiser is typically hired to complete this process in an unbiased manner, considering finances, market position, and intangible factors such as reputation.
Here, the fair market value is key, which means the price a willing buyer would pay a willing seller under normal market conditions. The valuation method chosen depends on the business type and what makes the most sense for the case.
Key Factors Courts Consider When Splitting Profits and Ownership
When courts divide profits and ownership in a divorce, they consider several key factors. They examine each spouse’s contributions to the business or asset, including money, labor, or support for the owner.
Then, the courts consider the economic situation and earning abilities of both spouses to ensure the division is fair for the future and review debts and liabilities tied to the business or assets before deciding how to split everything.
Conclusion
Every state has different rules for dividing property, making it essential to know the laws where you live. A lawyer can help you understand these laws and guide you through the process to protect your best interests when making the right choices.
