Laguna Beach Divorce Lawyer For Business Owners And High-Net Wealth Individuals

Divorce is challenging, and when significant assets or business interests are involved, it can get even more complicated. The decisions you make during this time will likely impact your financial security and peace of mind for years to come. That’s why having an experienced divorce lawyer, who understands both family law and the intricacies of dividing business and complex assets, is crucial. The right legal support can make this process smoother and help ensure a favorable outcome of the divorce.

At Minyard Morris, we understand how important it is to feel secure and supported by your legal team, especially when going through such a major life change. We’re honored to be one of the nation’s leading family law firms, trusted for handling challenging, high-stakes divorce cases with skill, dedication, and genuine care. Our team includes 20 experienced divorce lawyers who focus exclusively on family law cases filed in Orange County. With more than 350 years of combined experience, we bring deep knowledge and insight into every case, and we’re prepared to dive into even the most complex issues with a strategic, personalized approach.

We know that no two divorce cases are alike. When business valuations, intricate financial portfolios, or high-value assets are involved, the process requires a strategy tailored to your specific situation. At Minyard Morris, we take the time to understand your unique circumstances and goals so that we can develop a plan that best serves you. Instead of a “one-size-fits-all” approach, we focus on your needs, addressing each detail to effectively advocate for your interests.

Our goal is to help you transition through this process smoothly, without unnecessary delays. We know that nobody wants a prolonged divorce, and we’re committed to moving your case forward efficiently while staying focused on achieving the best possible outcome for you.

If you’re going through a divorce involving significant assets or business interests, Minyard Morris is here to help. With experience, dedication, and a true client-centered approach, we’re ready to support you through this important transition with confidence and clarity.

A Peek Inside Our Strategy Sessions

Every Monday evening, Tuesday at noon, and Thursday at noon, our team of 20 family law specialists gathers for in-depth strategy sessions. These meetings are not mere check-ins; they’re dynamic discussions where we delve into the complexities of our cases. Attendance is mandatory, reflecting our firm’s belief that the best outcomes arise from collaboration.

During these sessions, we cover a wide range of topics. We might debate how best to handle a particularly challenging opposing counsel or how to navigate the specific preferences of the judicial officer assigned to a case. We discuss new case law, recent appellate decisions, and the latest insights from seminars. We also revisit similar cases we’ve handled in the past, pooling our collective knowledge to address current challenges.

These meetings go far beyond legal theory. We explore settlement strategies, assess evidentiary issues, and evaluate the value of critical matters at stake. Our discussions are not confined to the legal aspects; we also weigh the client’s personal goals and objectives, considering every angle to build the most robust case possible. This comprehensive approach ensures that no detail is overlooked.

Why Our Meetings Make A Difference

In the family law community, our collaborative meetings have become something of a legend. Lawyers and judicial officers often express curiosity about how we run them. This reputation not only underscores our commitment to teamwork but also helps us attract talented attorneys who thrive in a collaborative environment. We’re not just a law firm; we’re a team of 20 experts leveraging our combined experience for the benefit of every client we serve.

So, why does this matter to you as a client? When you hire us, you’re not just getting one attorney—you’re getting the support and insight of 19 other family law professionals. Imagine being backed by a team with over 350 years of experience, compared to a smaller firm where a lawyer might only have the advice of one or two colleagues. The difference in perspective and expertise is invaluable.

How This Approach Helps Your Case

Here’s a real-world example of how our meetings benefit clients: one of our attorneys might be grappling with a specific legal issue and bring it to the table. Often, another lawyer has already dealt with a similar situation and can recall the relevant appellate court cases, providing instant guidance. This collective wisdom not only saves time but also strengthens our strategy.

Sometimes, a lawyer might seek a “reality check” on a contentious issue to hear the input of their peers. Other times, we focus on the odds of winning a particular issue before a specific judge or debate which expert witness would be the best fit for the case. Perhaps the most crucial aspect of our meetings is brainstorming creative solutions for settlements. We explore every possible avenue to overcome roadblocks, ensuring our clients have the strongest position possible.

An Unmatched Commitment To Excellence

It’s important to note that these sessions come at a cost. We devote the time of 20 attorneys to these thrice-weekly meetings, and none of this time is billed to our clients. With hourly rates ranging from $350 to $800, the internal expense is significant. But we remain committed to this practice because we believe in the value it brings. These meetings are a key part of what makes our firm different.

Yes, other firms may have occasional discussions about their cases, but none conduct formal meetings with the same frequency and intensity as we do. This level of collaboration is one of the pillars of our success and a major reason clients choose Minyard Morris. Our mission is to provide top-tier client service and achieve the best possible outcomes. We believe that our collaborative approach is essential in delivering on that promise.

At Minyard Morris, every case benefits from the collective experience and dedication of our entire team, and that’s a value you won’t find just anywhere. When you work with us, you’re not just hiring a lawyer—you’re engaging an entire firm committed to your success.

Handling Divorce When Business Assets Are On The Line

Divorce is rarely straightforward, but for business owners, it can present even more challenges. When a business is part of the marital assets, it’s essential to understand how courts approach its valuation and division. Unlike splitting simpler assets, the inclusion of a business adds layers of complexity to the divorce process, requiring specialized expertise and strategic preparation. This article is a comprehensive guide for business owners navigating divorce, offering insights into managing the unique challenges of dividing business assets.

This article is designed to help you work more effectively with your family law attorney. By understanding how business valuation and division work, you can become a valuable partner to both your Irvine family law attorney and any forensic accountant involved in your case. Ultimately, this knowledge can make the divorce process more efficient, cost-effective, and strategically sound.

Why Engaging Both A Family Law Attorney And Forensic Accountant Is Essential

Hiring both a family law attorney and a forensic accountant may seem like a hefty expense, but the financial risks of not hiring these experts could be even more significant. The main question to consider is: what could it cost if you don’t have professionals who ensure your business is accurately valued? An incorrect or incomplete valuation could lead to a major financial setback. Retaining a qualified family law attorney in Orange County could be one of the best financial decisions you make during your divorce, especially when you think about the difference between an expert valuation and an uninformed guess. Understanding these issues also helps you collaborate more closely with your attorney and forensic accountant, which can ultimately help in managing costs.

Is An Expert Necessary To Value A Business In Divorce?

While a business owner can technically testify about the value of their business, this often carries little weight in court—especially if the other spouse has hired a qualified valuation expert. Business owners generally don’t have an in-depth understanding of the legal principles surrounding business valuation in family law cases or the rules of evidence required in court. This knowledge gap may prevent them from testifying effectively or could even limit the admissibility of their documents in court.

A qualified valuation expert, by contrast, provides a carefully researched, impartial opinion based on detailed analysis. Courts tend to place more trust in the evaluations of a recognized expert than in a business owner’s subjective view. While a family law attorney can work with a forensic expert to build a strong case, the attorney cannot provide a professional valuation of the business. Without a forensic accountant, a business-related divorce case lacks the complete team necessary to deliver a solid, evidence-based valuation. Ultimately, the court will determine which side has provided the more credible evidence, and it’s unlikely that a judge would rely solely on the business owner’s viewpoint without expert backing.

What Business Information Must You Disclose To Your Spouse?

As the business owner, you are legally required to disclose all significant information about the business to your spouse. Deciding what qualifies as “relevant” can be tricky, but a good rule of thumb is to think, “What would I want to know if I were in their position?” Over-disclosure is usually recommended to avoid the risk of having your settlement or judgment revisited later. Over-disclosure means providing every document and fact that could impact the business’s valuation. Many advisors suggest that a business owner should disclose anything they would want to know if they were considering buying the business. Sharing full details with your family law attorney can also help them guide you more effectively.

Should You Wait For Requests To Share Documents Or Voluntarily Disclose Information?

No, waiting for document requests is not enough. In California, the law requires that a business owner voluntarily provide all relevant information to the other party. This includes both physical documents and any verbal information, like informal or verbal offers to buy the business.

What Are The Penalties For Failing To Disclose Key Business Information?

Failing to disclose essential business information can lead to serious penalties. Depending on the situation—including intent, motivation, or malice—penalties may involve awarding the other party 50% to 100% of any damages caused by nondisclosure, plus potentially significant attorney fees. Full, proactive disclosure is the best way to avoid these penalties and ensure you are meeting all legal obligations.

Do You Have To Disclose An Offer To Purchase The Business?

Yes, any offer to purchase your business—even if it was only verbal or didn’t result in a sale—qualifies as a material fact that must be disclosed. The terms, suggested price, and identity of the potential buyer could all play an important role in determining the business’s value during the divorce.

Is Disclosure Necessary For A Recent Business Appraisal?

Yes, any recent appraisal must be disclosed, regardless of its original purpose, the date it was conducted, or the valuation methods used. Courts consider past appraisals valuable information for assessing the current value of a business, even if they were initially performed outside the context of a divorce.

Final Declarations Of Disclosure: Are They Required?

The California Family Code requires both spouses to exchange Preliminary Declarations of Disclosure and, later, Final Declarations of Disclosure. Preliminary disclosures are mandatory and cannot be waived, but Final Declarations may be waived if both parties agree. However, even if the formal Final Declaration is waived, the duty to provide fully updated and accurate information remains. So, while the document itself can be waived, full transparency about the business’s financial status and value is still required.

What Is The Investment Value Of A Business In Divorce?

In divorce, businesses are not always assessed on fair market value alone. Many businesses may not be easily sold for a price that reflects their real worth to the owner, yet they still have substantial “investment value.” A common misconception is that a business has no value if it relies heavily on the spouse operating it. While some businesses do depend on the owner’s presence, courts in Orange County often calculate the “investment value” of a business, meaning its worth to the owner as an ongoing entity, rather than a sale price. This approach takes into account the time, resources, and effort the owner has invested, recognizing its special value to them.

How Are Taxes Considered in Business Valuation?

California family law is clear: courts cannot reduce the value of assets, including businesses, based on possible income taxes unless the taxes are specific, direct, and related to the divorce. Courts aren’t allowed to speculate about future taxes. For example, a business’s value cannot be reduced based on anticipated capital gains tax, even if the business’s tax basis is nearly zero. Furthermore, if a spouse is required to make an equalization payment to balance asset division, that payment is not tax-deductible and must be paid with after-tax funds.

What Date Is Used To Value A Business In Divorce?

Generally, the business is valued as close to the trial or settlement date as possible, unless the court authorizes a different date. An alternative valuation date may be chosen if external events have substantially affected the business’s value or if the business largely relies on one spouse’s personal work. If the business’s profitability is due mainly to one spouse’s labor, the court might choose the separation date for valuation purposes, as any growth in value from post-separation work is considered separate property.

Who Usually Receives The Community Business?

In most divorce cases, the court awards the community business to the spouse who is actively involved in its operation. Courts rarely order a community business to be sold. When both spouses are essential to the business’s function, the court will assess which spouse is better suited to manage the business successfully and contribute to its long-term growth.

How Can You Buy Out Your Spouse’s Share In A Community Business?

It’s rare for the court or the parties to agree that a business should remain jointly owned after divorce. Since the decision to separate usually implies an end to working together, continued collaboration in the business is often impractical. If one spouse is awarded the business, its assessed value is included on that spouse’s side of the marital asset balance sheet, while other assets (if available) are assigned to the other spouse. If necessary, the spouse retaining the business may owe an equalization payment to the other. For instance, if the wife is awarded a business valued at $400,000 and the husband is awarded $200,000 in home equity, the wife may need to pay an additional $100,000 to the husband to ensure each has $300,000 in net assets. This equalization payment may accrue interest if it’s paid over time, with payment terms often extending from one to four years, depending on financial feasibility.

How Does Business Ownership Impact Spousal Support?

The spouse awarded the business is expected to earn income from it, which will be considered in spousal support calculations. In a divorce, the business’s value to the awarded spouse may be lower than it would be in a standard market context since part of its income might go toward spousal support. This arrangement, sometimes called “double-dipping,” has been upheld by appellate courts as fair. If the business were sold and both spouses had independent jobs, support would be based solely on their employment income.

Determining A Business Owner’s Income For Support Payments

In divorce, income from a business is often referred to as “controllable cash flow available for support.” This includes income or distributions from the business and personal expenses paid by the business on behalf of the owner, known as “perks.” It may also cover retained earnings that could reasonably be distributed without harming the business’s cash flow or working capital. Voluntary retirement contributions are generally added back to controllable cash flow, as is depreciation in many cases.

Can A Prenuptial Agreement Safeguard A Business In Divorce?

Yes, a prenuptial agreement made before marriage can change the rules governing business ownership in a divorce. Such agreements can protect the interests of the owning spouse by specifying that income from the business and any growth in its value during the marriage are separate property. In effect, a prenuptial agreement can override California’s default legal rules, allowing the couple to set their own terms, which provides the business owner with more control over how business assets are divided if a divorce occurs.

Does A Buy-Sell Agreement Signed After Marriage Protect The Business?

Generally, a Buy-Sell Agreement signed after marriage doesn’t alter each spouse’s rights in a divorce. While it may impact business relationships with other shareholders or partners, it typically doesn’t change spousal rights unless each spouse has independent legal representation and fully understands the agreement’s impact on divorce proceedings.

How Are Account Receivables Valued In Business Division?

Account receivables are considered part of a business’s book value. Valuing them usually involves separating collectible receivables from non-collectible ones. This issue can become contentious if accounts receivable are written off during the divorce. Generally, accounts receivable are valued after taxes, similar to deferred compensation or stock options, as their real value is only realized upon collection, at which point they are subject to tax.

Determining Whether A Business Is Community Or Separate Property

The classification of a business as community or separate property usually depends on when it was acquired. A business started before marriage is typically separate property, although issues such as how it was funded or managed can influence this classification. If a business’s value increased significantly during the marriage due to community contributions, the non-owning spouse may be entitled to reimbursement, even if they don’t gain an ownership interest.

Can The Community Gain An Interest In A Separate Property Business?

Generally, the community doesn’t gain ownership in a separate property business unless the owning spouse formally reclassifies it. However, if the business’s value increased substantially during the marriage due to community efforts, the non-owning spouse may be entitled to reimbursement for these contributions, even though they won’t gain direct ownership.

Divorce cases involving business assets require careful planning, detailed analysis, and thoughtful strategy. Understanding how courts handle asset division, recognizing the specific challenges of business valuation, and proactively protecting your interests are crucial. By working with experienced professionals, consulting with specialists, and using mediation, you can navigate the complexities of divorce and business ownership in Orange County more effectively. Taking these steps helps ensure that your financial and personal interests are safeguarded, allowing you to approach this challenging time with greater confidence.

Separate Property

Separate property is defined as an asset that was acquired before the date of marriage, acquired after the date of marriage or acquired during the marriage by way of a gift or inheritance. Generally, characterization is determined by the date of acquisition. If an asset is not separate property, it is community property. The court confirms separate property to a spouse in a divorce and equally divides community property. The courts are not required to divide each individual asset equally, rather it can allocate the assets to each party as it chooses but the total assets awarded to each party must have equal values. The court has the power to sell an asset if it chooses to generate cash, in order to equalize the assets and it may also award assets in a disproportionate manner and order the party receiving assets with a greater value to pay the other party an equalization payment in a sum that ultimately results in an equal division of the total assets. However, ordering an equalization payment further complicates the issues, in that the interest rate on the sum owed and the duration of the payment can be disputed.

An inheritance is the separate property of which ever party receives the bequest, regardless of when the inheritance occurs.

A gift is the separate property of the recipient of the gift, regardless of when the gift is received.

Separate Property Business

A business owned before the date of marriage are the separate property of the owning spouse. The character of an asset is determined by the date of acquisition. If the owner-spouse works in the business during the marriage and the business increases in value during the period between the date of marriage and the date of separation, the community may have a right to reimbursement of either the amount of under-compensation of the spouse working in the business or a portion of the increase in value of the business after a reasonable investment return to the owner-spouse on the value of the business after the date of marriage.

The type of return paid to the community, in the form of a right to reimbursement, is determined by determining the main driver of the increase in value of the business during the marriage. The two cases that set these formulas are Van Camp and Periera. Van Camp is generally applied where the business is capital intensive and Periera is generally applied in a personal service type business. It is not always clear which formula is to be applied. It is possible for the court to apply one formula during one part of the marriage and the other formula during the other part of the marriage, although that is rare. Such a split would occur when there was a major change the nature of the business during the marriage.

Neither the community nor the non-owner spouse can acquire an ownership interest in the business. The recovery is limited to the right to reimbursement. If the right is to any under-compensation to the owner-spouse, the amount is the total under-compensation to the owner-spouse during the marriage less income taxes and not including any interest. The non-owner spouse would receive 50% of that sum. If the recovery is based on a portion of the increase in value during the marriage, the return paid to the owner, before the right to reimbursement, is an interest rate paid on a long term secure investment or an industry rate. This rate could be seven percent, ten percent or an industry rate which in one case was set at 12%. The fact that the non-owning spouse worked in the business with or without compensation does not impact the value of the business. The sum to be paid to the community does not bear interest.

The only manner in which a separate property business can become a community asset is for the owning spouse to sign a writing that transmutes the asset into community property. The writing must be an express declaration of a change of ownership. The writing does not have to have specific magic words but the words must make it totally clear that the ownership and character of the asset are being changed. It is said that a transmutation cannot accidently occur. The character or ownership of a business will not be changed based on oral statements about who owns the business or promises about future ownership.

Business Valuation

A business formed or purchased during the marriage is presumed to be community property. The business is generally awarded to the spouse who is operating the business and is valued using one of the valuation methods accepted by the courts. Courts have wide discretion in valuing businesses but cannot use a method that speculates about future earnings. The two most common methods are know as the ‘capitalization of earnings’ which is an income approach and the ‘capitalization of excess earnings’ which is an asset approach. Often forensic accountants use both approaches.

The case law is clear that the real valuation is the investment value, which is the value of the business as an investment to the owning spouse. The value is not necessarily what a business could be sold for. The spouse is awarded the business is charged with the value of the business without any adjustment for potential future capital gains. If there is an equalization payment to be paid to the other spouse, the payment is an after-tax payment and is not deductible for tax purposes by the paying spouse and not includible to the recipient spouse.

Separate Property Family Residence

If a party owns a home before the date of marriage, that residence is that parties, separate property. If the mortgage payment includes a partial paydown of the mortgage with each payment, and the mortgage is paid with community property, the community acquires a pro-tanto interest in the residence (not a right to reimbursement). The amount of the interest is determined by the amount of the paydown of the mortgage and the amount of the increase in the value of the home after the date of marriage. The fact that the community had the benefit of living in the residence during the marriage does not impact the formula referred to as Moore Marsden.

If the owner spouse transmutes (gives) the house to the community during the marriage, that spouse is, in effect, giving the appreciation of the house to the community, after the date of the gift. However, if the owner spouse expresses in writing a waiver of the family code section 2640 rights, the gift is of all of the equity in the home to the community. In other words, if, on the date of the gift, the equity in the residence was $1,000,000 and at the time of the divorce the equity was $2,000,000, unless there was a family code section 2640 waiver, the proceeds would be divided $1,500,000 to the spouse who owned the house before the date of marriage and $500,000 to the other spouse.

Date O f Separation

One of the first issues that is addressed in a divorce is the date of separation, which is defined as the date when one party clearly and unambiguously states to the other that the relationship has ended. A trail separation is not a separation, in that it is not a final separation. Moving out of a residence is not, by itself, a separation. Of great relevance is, what words were spoken at or about the time of the separation. The end of sexual relations between the parties, is not by itself, a separation in the same way as ceasing to wear wedding rings will generally not constitute a separation depending on other factors. The date of separation may be determined by the totally of the events occurring at the time. Of significance is the fact that a clear date of separation may be voided by conduct, after the date of separation, that evidences a reconciliation or a resumption of the marital relationship.

The statement by one party to the other that a separation has occurred need not be in writing to be effective. However, failing to document the event in a text message or email may result in the other party misunderstanding the communication or denying it. To put the importance of this issue in perspective financially, understand that the date of separation can impact the duration of spousal support, the valuation of certain assets, and the responsibility for certain debts. A dispute relative to the date of separation may be of financial significance and may result in a multi-day trial relative to the date of separation, which could have been avoided with a simple email or text message.

Expenditures Post Date Of Separation

The earnings of a party after the date of separation, are that party’s separate property. Expenditures made after separation may be categorized as the separate debt of the party incurring the expense. If the parties are using joint credit cards or the same checking account, sorting out whose expenses are whose, can be time consuming and very expensive. Often a forensic accountant is involved in the project and sometimes the differences are significant enough that the matter is litigated. The simple solution is at or about the date of separation, separate the credit cards and checking account.

Payment Of Community Expenses After The Date Of Separation

A common issue is whether a party should receive credit for using separate post-separation earning for the payment of expenses that are community in nature. If a party uses separate earnings to pay community expenses after the date of separation, credit should be received unless the expenses is for an asset that they paying party using, the payment is in lieu of support or there is an agreement to the contrary. For example, if a party is paying the lease payment for a car that they are driving, no credit should be given.

Practical Tips

If you are separating, consider the following tips:

1. Deposit your paycheck in a new and separate account
2. Separate finances and start using a new and separate checking account
3. If your cell phone is on a family plan change providers
4. Change all of your passwords
5. Set up an email account to communicate with your lawyer that is not an email address that your spouse has access to
6. Stop social media postings
7. Consult with a divorce lawyer before making any significant financial decisions or purchases

Orange County Divorce Lawyers Serving Laguna Beach

By selecting the right lawyer, you can deal with this challenging life event with confidence. Trust the experienced Orange County family law attorneys of Minyard Morris. Call our firm at (949) 724-1111or contact us online to schedule a consultation.