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Dividing an Online Business in a Divorce

Posted by Thomas Huguenor on October 7, 2020 in Property Division

For the past two decades, more and more California businesses have shifted to online marketplaces, with many relying solely on e-commerce sites to handle their orders and services. When a business is shared by a couple that later divorces, dividing these assets, especially the digital ones, can be extremely confusing. You may find it difficult to determine what is marital or separate property without the aid of an experienced divorce attorney.

How Business Are Evaluated

When a couple chooses to divorce, they must determine how their assets will be divided and what constitutes marital property and separate property. In the state of California, divorce courts often view marital property as “community property,” meaning the property is shared jointly by both parties and should be divided equally in a 50/50 split. Following your divorce, the courts will allocate you your half of the marital property as your individual, separate property.

This process can be more complicated, however, when you take into account a business. Generally, if a business is founded before a marriage and only one of you has ownership over it, it will be considered separate property. But when a business is founded during a marriage or you both share ownership over it, you will need to work with a forensic accountant to determine the value of the business and how it should be divided. This can become more complicated if you have a high asset business that does not have a clear market value or if the majority of assets are conducted online, meaning you will need to determine ownership of URLs, trademarks, copyrights, and social media accounts.

Evaluating Digital Property

The intangibility of digital property might be more difficult to evaluate and divide during a divorce, but it is not impossible. Digital property may have a specific market value that a forensic accountant can determine by analyzing annual revenue, the value of trademarks and copyrights, the role of various marketing channels, and the value of any physical or digital products within the business’s catalog. This can allow you and your soon-to-be-ex to come to a fair agreement about how the business should be divided, such as by buying out the other owner’s half of the business, selling it to a third-party, or joint ownership.

However, you will also need to determine who legally owns the company’s digital assets. In some cases, you may have joint ownership of specific social media accounts, digital marketplaces, websites, or servers, while some online services or accounts only allow one individual to legally own a website or database. Thus, when it comes time to divide these assets, you may need to consider receiving other property in lieu of the digital account or service.

Sadly, much of this is based on the idea that your divorce is amicable and that you can work with your soon-to-be-ex to evenly divide a business. If your divorce is contested, then you find it difficult to properly review all assets in your marriage, including your stake in an online business.

Secure Proper Representation During Your Divorce

Dividing an online business requires a thorough understanding of the financial and legal side of a divorce, which is why you need the skill and knowledge of the San Diego divorce attorney at Huguenor Mattis, A.P.C. Our firm has more than 45 years of experience helping clients untangle complex marital assets and are not afraid to take the complicated cases that other lawyers shy away from. To receive thorough and detailed legal guidance throughout divorce proceedings, enlist the aid of Huguenor Mattis, A.P.C. by calling (858) 458-9500.

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Posted in: Property Division

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