"Channe really has your back. Dealing with lawyers and child custody is hard enough, stressful beyond; but Channe and staff really stood strong for me and I got the results I wanted. She totally understood my situation after only one meeting, and was there every step of the way. She also tried to help me keep my cost down. I could not be Happier :-)"
Laura P. (Google)

Santa Barbara Business Valuation Attorney

Business Valuation in a California Divorce 

Absent an in-kind division of community assets, or sale and division of proceeds, valuation of each item in the community estate is an essential prerequisite to the court's responsibility to effect a net equal division in a California divorce. A spouse's business is a marital asset, the valuation and division of which is typically one of the most expensive tasks in a marital dissolution action. The key determinations in dividing one party's business estate are the worth of the enterprise and the amount that is considered community property. There are several cases in California which have reviewed the various methods used by experts in valuing a professional practice. One thing which is consistent between all of these decisions is that the court will uphold any method for valuing the practice, including goodwill, so long as the evidence legitimately establishes value.

Valuation of a community business is ultimately a question of fact, to be resolved in the exercise of the trial court's broad discretion based on the range of evidence presented. Business valuations are typically prepared by a variety of experts, including business appraisers, brokers, financial analysts, certified public accountants, and economists, though it is also true that respective parties can also testify to the respective value of their business. 

According to California community property law, the spouse of a business owner is entitled to a 50 percent share of that business or professional practice, provided that it was created during the marriage. If the owner started the business prior to marriage, then the spouse is entitled to half of the appreciation in value of the business that accumulated during the marriage, depending on the type of business and compensation earned during the marriage.

Santa Barbara Business Valuation Attorney

At the Law Office of Channe G. Coles were are proficient in using the primary methods for determining the marital appreciation of a premarital practice or business (e.g.; Van Camp and Pereira), and work closely with experts to decide which approach is more beneficial or applicable to your circumstances. Typically, each side hires its own business valuation expert. If the parties are unable to negotiate a compromise, then the court will assign a value after hearing all of the evidence. The trial court's determination as to value will be upheld on appeal so long as supported by substantial evidence in the record. 

Once a value is determined, the issue is how the business owner spouse will buy out the other party's community interest in the business or practice. It may be a tradeoff of other marital assets or debts. It may be a cash settlement or future promise written into the settlement agreement. In other situations, spouses may choose to continue as co-owners, or agree to liquidate or sell the business and divide the proceeds.

The Law Office of Channe G. Coles competently handles divorces involving closely held businesses and professional practices. We anticipate common disputes related to business valuations and separate property, and we help clients find creative and practical ways to compensate a spouse for equity in the business. We will also address the tax considerations and consequences of income drawn from the business, and other issues relevant to the broader divorce settlement.

Discuss the Valuation and Division of Your Business Today

Serving clients all over Santa Barbara County, attorney Coles represents business owners and their spouses in all facets of property division. To speak to an attorney at the Law Office of Channe G. Coles about options regarding the valuation and division of your community property business in Santa Barbara County, please visit us online at www.ccsblaw.com or call us at (805) 617-4618 for a free confidential consultation.

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