Divorce when one or both spouses own a business.
A closely-held company is often the most valuable — and most fragile — asset in the marital estate. The right valuation methodology, the right buyout structure, and the right protective orders can preserve both the company and your future.
What you need to know
When a business has community-property character (in whole or part), California courts must determine the value of the community interest and how to divide it. The two most common methods are an in-kind division (rare for operating businesses) or a buyout funded by other assets or structured payments.
- Pereira and Van Camp formulas allocate appreciation between separate and community interests.
- Goodwill — both enterprise and personal — must be valued and characterized.
- Spousal employment in the business creates Watts/Epstein post-separation issues.
- Buyouts can be funded by trade of other assets, structured payments, or sale.
- Protective orders can shield trade secrets, customer lists, and financials during discovery.
Related topics & situations
Business Valuation Methods
Asset, market, and income approaches in CA family court.
Pereira vs. Van Camp
How CA allocates appreciation in a separate-property business.
Goodwill Valuation
Enterprise vs. personal goodwill and divisibility.
Buyout Structures
Lump sum, structured payments, and offsetting trades.
Protecting Trade Secrets
Protective orders and sealing in family court.
Partnerships & LLCs
Buy-sell agreements and partner consent issues.
Professional Practices
Law firms, medical practices, and licensed entities.
Spouse-Employed Businesses
When the other spouse works in the company.
Under Pereira v. Pereira (1909) 156 Cal. 1, when a separate-property business appreciates due primarily to a spouse's labor, the court allocates a fair return to the separate estate and treats the balance as community. Van Camp (1921) 53 Cal.App. 17 applies the inverse where appreciation is due primarily to capital — allowing community wages and treating the residual appreciation as separate.
Source: California Family Code & California State Bar guidance. General information only.
HNW · Business Owner Divorce — frequently asked questions
Is my business community property in California?
How is a business valued in a California divorce?
What is Pereira vs. Van Camp?
What is the difference between enterprise and personal goodwill?
Can my spouse force me to sell my business?
How can I keep my financials private?
What is a buyout in a divorce?
Will my business partners be involved in my divorce?
How are professional practices valued?
Can I keep operating control during the divorce?
Speak with a San Diego family law attorney today.
Every conversation is private. Most clients leave the first call with a clear sense of what to expect — what California law says, what your case is likely worth, and what to do next.