How a Business is Valued in a California Divorce

When you’re going through a divorce, it feels as though you’re deconstructing your life one piece at a time. It’s even more complicated when you and your spouse run a business together. A mutual enterprise quickly becomes one more asset to inspect, evaluate, and sometimes dismantle. Like everything else spouses buy, build, or acquire during a marriage, businesses are community property. As with other property you share, someone you don’t know could make important decisions about your business. 

As joint owners, you and your spouse must produce evidence to address your business’s value, community property interests, income, and other key financial data. Of course, some businesses are more complex than others. Even if you own a small, uncomplicated, Mom & Pop operation, you need a business valuation expert to answer and address relevant issues.  

A Certified Specialist in Family Law

Attorney Steven M. Bishop understands that family businesses often add layers of complexity to an already complicated situation. As a Certified Specialist in Family Law, Bishop has helped clients resolve community property disputes. He recognizes the importance of involving an experienced business valuation professional. They provide a clear, unbiased value assessment that can help you manage your community property challenges. 

Why do You Need a Business Valuation?

In distributing community assets and liabilities, the court has the final say about what is fair. As a divorcing couple, you retain control over the decisions if you work out an agreement ahead of your trial. Whether you hammer out a distribution agreement for your business or you let the court decide, a professional business valuator helps both you and the court make an informed decision. 

Of course, you know your business intimately. When you’re involved every day, you have a feel for how your business is doing and where it’s going. You track your cash flow, sales, payables, and receivables through timely bookkeeping. Financial reports provide organized data to help you monitor your progress. Annual tax filings require that you review your overall financial picture.

A business valuation provides another critical piece of financial data you might not have considered before. It tells you how much your business is worth. A valuation assigns a cash value that makes it easier when dividing community property

Choosing Your Expert

As joint business owners, both spouses should exercise some control over your business valuation. You must manage it in a way that allows you to feel confident in the process. You can hire a single expert to represent both your spouse and you, but each party has the right to hire an expert of their own. Evaluating your business is an in-depth process. It ultimately affects the fairness of your property distribution. It’s essential that both parties feel comfortable with their choice of experts. 

Based on California Family Code, Division of Property, §2552, the court considers your assets and liabilities “…as near as practicable to the time of trial…” The court may allow an earlier valuation date. You or your spouse must make a request and show good cause that an alternate valuation date would better accomplish an equitable division.

In addition to your business’s value, the court reviews these factors.

  • Each spouse’s part in developing or operating the business. 
  • Day-to-day control 
  • Ownership status
  • Whether the business is a separate asset
  • Increases or decreases in the business’s value since the separation

The Business Valuation Process

A business valuation is a complex process. All valuation experts review your financial records and rely on varying approaches and methods to reach a final figure. Whatever expert you chose and however your expert performs their appraisal, they review key pieces of financial information. 

  • Current debts and liabilities
  • Fixed assets and values
  • Accounts receivables, payables, and tangible assets
  • Reputation, goodwill, and other intangibles

Valuation Approaches and Methods

In evaluating your business, an expert chooses an approach and a method. 

Asset Approach

Several methods allow value analysis based on the cost to buy a similar business. 

  • Adjusted Net Asset: Determining the fair market value of equipment and other business assets as of the required valuation date
  • Liquidation: Determining a value based on the outcome of liquidating the assets of a closed or closing business 
  • Book Value: Considers asset values as determined by financial accounting (technically lower due to allowable depreciation) 
  • Excess Earnings: Considers higher than reasonable earnings produced by a business’s standing or goodwill

Income Approach

Using this approach, a business valuation expert determines the present value of projected business potential. 

  • Capitalization of Earnings: Considers your business’s net present value and the expected return on investment (capitalization rate).
  • Discounted Earnings: Assesses value based on projected future cash flow discounted it to present value. 

Market Approach

Some experts arrive at a value based on recent sales of comparable businesses. Valuation methods include:

  • Public Company: Based on financial data from publicly traded companies 
  • Company Transactions: Uses values from comparable businesses with similar structures
  • Discretionary Earnings: Based on a multiple of the annual financial benefits from a business (multiplier varies depending on the business type)
  • Gross Revenue: Based on a company’s net sales or gross revenue 

The business valuation process is far more complex than these simple descriptions suggest. It becomes even more complicated when the roles are unequal. Problems arise when one spouse owned the business prior to the marriage or one spouse put more effort into building the business. The case, Pereira vs Pereira set the standard for a non-owner spouse seeking to prove that they contributed to the business’s success. The case, Van Camp vs Van Camp addresses community property businesses where a business’s success wasn’t related to a community effort.

A business valuation is vital when you own a business jointly with your spouse. Your expert should have the experience to use an evaluation process that best suits your circumstances. Your attorney can help you determine if it’s best for you to work out a division agreement with your spouse or wait for a judge’s ruling. 

Contact The Law Offices of Steven M. Bishop

Before you hire an expert to review your business, consult with an attorney Steven M. Bishop for recommendations. He provides guidance and assistance in choosing an expert with experience that’s relevant to your business. Attorney Bishop has assisted many clients in resolving complex community property issues.

To schedule a consultation, call our office at (619) 299-9780 or complete our Contact Form.


What Are Contested vs Uncontested Divorces in California

Typically, when we think about a contested divorce, what we immediately believe is the two parties do not agree upon the idea of seeking a divorce. However, since California, like most other jurisdictions, offers no fault divorce, a court is unlikely to deny a final divorce just because one party is unhappy about the possibility.

Contested divorces instead occur when the couple is finding it impossible to agree on issues which require settlement. Some of these include:

When the spouses have a disagreement and cannot find common ground regarding the terms of the divorce, the divorce becomes contested. When a couple can agree on the terms of the divorce, the divorce is considered uncontested.

In some cases, divorces are easy: When a couple cites irreconcilable differences, has no unpaid debt which are greater than $6,000, have no real estate, and when alimony is not a consideration, a summary dissolution can be used to dissolve a marriage. This is the fastest type of divorce.

The High Dollar and Emotional Costs of Divorce

Couples are emotionally invested in the life they have built together. Whether a couple has been married for five years or five decades, the ending of a relationship is far more challenging than walking away. When emotions run high, it is difficult for a couple to agree on the major issues pertaining to their divorce. Not only do these disagreements wreak a significant emotional cost on the two parties, they can also result in unnecessary financial costs.

The fewer issues which need to be decided by the courts, the better off for everyone involved. When a couple can agree on property division, division of debts, child custody and support issues, and visitation issues, the chances are high they will not have to go to court. The couple would draft and sign an agreement and their attorneys can deal with the court filings and approvals.

When Property Division is Contested

California is a community property state. Community property is classified as any assets which the couple came into possession of during their marriage. Exceptions to community property include inheritances, gifts, and settlements from personal injury lawsuits. However, there are cases where community property may not result in assets being equally divided between the spouses including:

  • Property acquired before the marriage — when one partner had an asset coming into the marriage, it is considered sole property. During the marriage, providing they have not given up any rights to the property, it remains sole property.
  • Pension and profit-sharing plans — in some cases, a spouse has a pension or profit-sharing plan as part of a job they held prior to the marriage and continued throughout the marriage. Generally, only the portion of the accounts generated during the marriage would be considered community property.
  • One spouse is member of military — military divorces are subject to “minimum’ time a couple is married. In most cases, a divorced spouse is not entitled to benefits such as pension or medical benefits if the marriage has not lasted at least 10 years.

When Child Custody is Contested in California

One of the most difficult issues parents must deal with in a California divorce is that of custody of the children. Contested child custody hearings, occur when one parent files a request for order and the other files a dissent. The courts will generally appoint a third-party to perform an evaluation and report back prior to the hearing. The judge will then decide on legal and physical custody of the children. Here is what this means:

  • Physical Custody — the court may award physical custody of the child to one or both parents. Joint physical custody means the child will split their time between the home of each parent. Generally, this is not a 50/50 division of time. Instead, the court will work with each parent and lay out a schedule for where the child will be.
  • Legal Custody – when a parent is granted legal custody, they are charged with making all decision which will impact the child. These decisions include religious training, education, and health care. Unless there is a valid reason to not pursue it, the court will generally grant both parents legal custody to ensure they come to an agreement on these matters.

When one parent is awarded physical custody of a child, a parenting plan (or visitation plan) must be put into place. Unless there are circumstances which would endanger the child, these plans are designed to ensure the child is developing a relationship with both parents, not just the one they are living with most of the time.

Support Payments for Children and Spouses

Supporting children financially until they reach adulthood is the responsibility of both parents. Generally, if one parent has physical custody, the non-custodial parent will be asked to pay support to the custodial parent. When parents cannot agree on a dollar amount, the court will take various factors into account and set the amount of payment. This amount then becomes part of the final decree and is considered a court ordered payment. Failure to make child support paymentscould result in the non-paying party facing contempt of court charges, losing their professional license, and having their income tax refunds seized for payment.

Alimony payments are handled differently than child support. Spousal support is intended to be a temporary bridge until the receiving spouse is able to be self-supporting. Courts will look at various factors including length of marriage, division of assets, earning capacity, and physical health of both spouses before making a determination.

When couples cannot agree on small matters, the bigger issues they are facing can become even more complicated. Generally, the more a couple can agree upon before filing for divorce with the family court, the better for both parties. Whether you are dealing with a contested or uncontested divorce in California, contact The Law Offices of Steven M. Bishop at (619) 299-9780 and schedule a free consultation. You will see why our four decades of serving clients matters.

What Does the Average Divorce Cost in California?

Divorces are messy, time-consuming, and costly. The state where you file for divorce, the complexity of your marital estate, and how successfully you can work with your soon-to-be ex-spouse resolving issues pertaining to your divorce will play a role in the overall cost of your divorce. The more issues you fail to reach an agreement on, the more likely you are to face higher than average costs.

Hourly Costs of California Divorce Attorneys

Generally speaking, a family law attorney will charge between $300 and $365 per hour in California.  Divorces can be time-consuming, the shortest time is usually eight months while the longest time is generally 20 months. On average, a divorce takes approximately 15 months between the initial filing and the divorce being finalized. This time may be longer or shorter depending on whether some issues can be resolved before going to court. When a couple has children, the overall proceedings may also take longer. Couples should anticipate costs of between $17,000 and $26,000 for the total cost of a California divorce. It is important to review some reasons why divorces can take so much time.

California Divorces and Property Division

One of the first issues a divorcing couple will have to contend with is property division. California is a community property state which means any assets (or debts) accumulated during the marriage are property of both spouses. However, there are some things you should be aware of which can change the “value” of your marital estate including:

  • Sole property – any property which one spouse had prior to the marriage is considered sole property of the spouse who had the property. Additionally, any settlements reached in personal injury cases, inherited assets, or gifts given to one partner remain the sole property of the spouse and are not considered community property.
  • Property covered by pre or post-marital agreements – some couples sign prenuptial agreements, or enter into similar agreements after they are married. Any property which is explicitly mentioned in a valid agreement as belonging to one spouse or the other would be honored by the courts.
  • Commingled property – if one spouse worked in a company prior to marriage and they were earning funds in a pension plan, the amounts deposited prior to the marriage, and after the couple was separated would be considered sole property.
  • Property obtained after separation – any property (or debt) accumulated after the couple is no longer cohabitating would belong to the partner who acquired the property.

As you can see, resolving property disputes is not always straightforward, even with community property laws. Additionally, if one or both spouses have an interest in a business, or they have a very high combined net worth, the process could be even more complicated.

Child Custody and Support Issues Impacting California Divorce Costs

While parents feel they must act in the best interest of their children, in nearly all divorce cases there are disagreements over child custody. These disagreements result in divorces getting delayed and increased costs. Should the issue of child custody need to be decided by the family court, there are a couple of options which the judge has. These include:

  • Legal custody – legal custody impacts the decisions which are made for the child including health care, education, and where the child lives. Legal custody may be awarded to one parent or both. If both parents are awarded legal custody, they will make decisions about important issues after consulting with one another.
  • Physical custody – this impacts where the child will live. Like legal custody, physical custody may be awarded to both parents. This does not always mean the child will spend the exact amount of time with each parent, but there is a mutual agreement on when the child spends their time and the time between parents is divided as equally as possible.

Once custody has been determined, then the matter of child support must be addressed. Legally, both parents are expected to contribute to the financial welfare of a child. Various issues such as the age and health of each parent, earning capacity, and other factors will be taken into consideration when calculating support. When physical custody is awarded solely to one parent, the non-custodial parent generally pays child support to the custodial parent.

Contested Versus Uncontested Divorces

Another factor which will play a significant role in the final cost of a California divorce is whether the divorce is contested. Contesting the “notion” of divorce seldom occurs because the court is unlikely to stop a divorce where one spouse is determined to move forward. Generally, once a spouse has made that decision, there is no turning back. Contested divorce usually means the couple cannot agree on issues including child support, custody arrangements, visitation and parenting plans, or spousal support. When this happens, a judge will make those decisions on behalf of the couple.

Keep in mind, if a divorce is contested, versus the couple working out most issues before going to court, nothing is really final. Appeals can be filed if one spouse adamantly disagrees with a specific ruling such as who has legal or physical custody, or the judge orders the marital home to be sold and one party does not want it sold, or a judge orders spousal support and the person ordered to begin paying support contests the ruling.

Divorces Are Fraught With Problems Clouded by Emotions

Divorce is never easy, whether a couple has been married five years or five decades. Regardless of the circumstances, emotions often get the best of the involved parties. The more issues which are contentious, the more complicated, and therefore the more expensive a California divorce proceeding will be.

Whether your spouse has just informed you they are filing for divorce, or you are planning to file for divorce, you should seek assistance from a certified specialist in family law in California. Contact a family law attorney who has experience handling all types of divorce cases as soon as possible. Working with an experienced lawyer can help you save money and time, particularly if you can agree with your soon to be ex-spouse on some major issues.

Current California Divorce Statistics

Divorce is always a possibility. The number of divorces annually in the United States has declined significantly over the past two decades from an average of 4 per 1,000 people in the population  in 2000 to an average of 2.9 in the same population in 2018 according to the Centers for Disease Control (CDC). However, these numbers may not tell the entire story for California because for several years, we had a higher percentage of divorces than many other states, in some cases, as much as two times the national average.

California Divorce Rates Show Improvement Over Time

In 2012, Orange County CA was highlighted in an article in the Orange County Register. The article showed that on any given day, 33 people were filing for divorce. This is a staggering number of divorce cases which reflected the overall area could have a divorce rate of as much as 10 times higher than the national average.

Most recently, U.S. News published a list of states with the highest and lowest divorce rates. In this study, which was a 1 year American Community Survey where  California ranked among the 10th lowest states for divorces, 6.5 percent for every married woman. By any count, this is still a high number and anyone who is currently married should take the steps needed to protect themselves today in the event their marriage does end in divorce.

Most Common Reasons For Divorce

There are no two couples who are the same, and as a result, divorces occur for any number of reasons. There have been studies in the past which indicated the major contributing factors which led to divorce were  infidelity, conflict, and lack of commitment. However, when these major factors were mixed with domestic violence, or substance abuse, the chances of a divorce occurring were even higher.

Complex Divorce Issues When Couples Cannot Agree

While statistics are fascinating to review, it is important to remember there are people behind the numbers. Every divorce statistic represents at least two people and in many cases, they also represent children of the marriage. Divorce proceedings, despite no fault divorces, are difficult for everyone involved.

A divorce requires couples to deal with issues such as child custody, property division, and support issues. Both parties believe they are right, neither wants to give up their grasp on their children, and both are concerned about finances moving forward. A skilled divorce attorney can help you look beyond the statistics and navigate the issues which are common in a divorce proceeding.  Some issues you will have to resolve include:

  • Property Division – California is a community property state which means most assets acquired during the marriage will be divided equally between the spouses at the time of a divorce. This can be complex when there is a large marital estate with more than one home and a business. This is one reason it is important to speak with a family law attorney to help you preserve your interests.
  • Child Custody and Parenting – coming to an agreement about where your children will live and what visitation schedule will be followed is important. For most parents, making this decision together is generally in the best interest of the children. Rather than allow the courts to make this decision on your behalf, it is almost always preferable to attempt to work this out between the parents.
  • Child and Spousal Support – both parents have a moral and legal obligation to ensure their children’s financial stability. In California, there is a formula used by the courts to determine who pays child support and how much is paid. Spousal support depends on numerous factors and may be temporary to allow one spouse to return to work. You should speak with your attorney whether you may be a recipient of support, or a payer of support. The determination is generally based on factors spelled out in California’s family law code.

Several issues must be resolved between partners or it is left up to the courts to make those decisions on your behalf.

Post Divorce Issues to Be Resolved

Just because a divorce is final does not always mean all issues are resolved. Problems with payment of support, failure of one partner to liquidate assets and provide the other partner with their share, and other issues can occur even after a divorce is finalized. In these cases, it may be necessary to file with the courts to request the non-compliant ex-spouse be held in contempt of court.

Partners who have previously created estate plans will also need to consider modifying their plans to reflect their new reality. An estate plan can also help protect your children’s future, making it even more important.

The Varying Impact of California Divorce Costs

Every divorce is different and the more you and your soon to be ex-spouse can agree upon, the less costly it will be for everyone both financially and emotionally. Since California is a no-fault divorce state, when the two parties can reach an agreement, the costs associated with a divorce will be lower.

Parents must remember they should keep the lines of communication open, particularly when there are children. Parents with children will have to continue to be involved in each other’s lives as they make important decisions about their children’s health, education, and other life events.

Remember, the courts will make decisions on your behalf when you cannot reach an agreement between you and your spouse so it is important to have an attorney advocating on your behalf. The courts seldom, if ever, automatically defer to one parent or another when determining custody issues, instead their goal is to make a decision based on what is best for the children.

Divorce is traumatic for everyone and you need someone who can guide you through the process. The Law Office of Steven M. Bishop, CFLS, has the experience necessary to achieve your goals. Let a lawyer who is a Certified Family Law Specialist help you with all issues pertaining to your divorce for the best possible outcome. Call us at 619-724-4547 or contact us online to schedule a no-obligation consultation today.

Orange County Register:

I did not directly link to this because the piece is highlighting a local mediator.

Will I Get Alimony After My California Divorce?

Despite California being a community property state, there are still disagreements over finances when it comes to dissolution of a marriage. Divorces are messy — they are even more messy when one spouse has dedicated their marriage to raising a family and taking care of the home foregoing the opportunity to pursue a career. Oftentimes, this will result in the working spouse being required to make alimony payments to the non-working spouse.

Who is Entitled to Collect Alimony Under California Laws?

It is important to remember, alimony payments, or spousal support, can be awarded to either spouse, regardless of gender. The courts will take a hard look at a number of factors when considering alimony payments including:

  • Ability to earn a living
  • Standard of living during the marriage
  • Amount of child support (if any) awarded
  • Assets of both parties
  • Health and age of both parties
  • Length of marriage

While some people believe a marriage of less than 10 years means they will not have to pay alimony, this is a myth. In many cases, the court will order temporary alimony payments with an “expiration” date which is generally less than the term of the marriage. In a long-term marriage, the court may order permanent alimony payments.

Common Misconceptions About California Alimony Payments

One common myth about alimony is that it is meant to be punitive. This is not the case in any way. Regardless of the reasons for your divorce, there will not be an increase in the amount of alimony you can be awarded. Some other misconceptions include:

  • Once alimony is ordered by the court it cannot be altered — this is not true. If you are awarded alimony by the court there are circumstances where you may lose alimony or have the amount increased. Talk to your attorney about this further.
  • If I do not want to work it will not impact alimony — this is also not true. Alimony in California is designed to be a bridge to allow the recipient to transition from being part of a couple to being a single person who is financially self-sufficient. Should the recipient of alimony refuse to seek alternative methods of supporting themselves, the court could reduce or eliminate alimony. There are exceptions to this, particularly in long-term marriages which you should discuss with your family law attorney.
  • Child support has no bearing on alimony — this is also an inaccurate statement. When alimony is calculated, it is done after child support is calculated. This means in many cases, the overall total of alimony awarded is based on a lower income scale because the court’s first obligation is to ensure the financial stability of the child or children.
  • Sole assets or assets awarded in divorce will not impact alimony — this is false. If one spouse has sole assetssuch as an inheritance, recovery from a lawsuit, or assets they brought into the marriage, these assets may be considered when a court awards alimony.

Alimony in Short-Term Marriages Versus Long-Term Marriages

Because the length of your marriage does have an impact on alimony, it is important you understand how time factors into alimony awards. In most cases, the courts take the position a marriage which lasted 10 years or less will result in alimony being awarded for one-half of the length of the marriage. This means if your marriage lasted six years, you may be entitled to collect alimony for only three years.

For long-term marriages, other factors including health, education, and employability will be more heavily weighted. In marriages where one spouse provided support while another spouse enriched their earning capacity by either working, or caring for children and the home, or otherwise helping their spouse will be considered as well.  In general, the longer the marriage, the longer the duration of alimony — and the more likely alimony will be permanent instead of temporary. To ensure permanent alimony is awarded, the final agreement or judgment must not contain a “Gavron Warning” which is defined as “fair warning to the supported spouse that s/he is expected to become self-supporting.” Your family lawyer can explain this to you further, as it may not apply in your case.

What You Should Know About Alimony Modifications

Once an order has been issued for alimony payments, either party may request the court review the order for modification provided there are no stipulations in the agreement which prohibit such a request. Before a modification may be requested however, there must be a material change which warrants the request or the court may simply deny such a request. Material changes may include:

  • Paying spouse lost well-paying job and had to settle for a lesser-paying job
  • Paying spouse has retired from employment
  • Paying spouse has received a substantial increase in wages
  • Receiving spouse is now working
  • Receiving spouse has inherited money/received a windfall (winning lottery, etc.)
  • Receiving spouse is cohabiting or remarried
  • Children of the marriage have reached age of majority and child support is no longer being received by the spouse receiving alimony

Keep in mind, there may be other circumstances which would warrant an increase or decrease in alimony payments and if you believe you should be seeking a modification for additional alimony payments, you should speak with an attorney who has experience handling these types of cases.

Want to Know More About California Alimony Following a Divorce?

As you can see, there are many factors which will be taken into consideration to determine whether you will receive alimony following a California divorce. No single answer is the same for any two people because no two people’s circumstances are identical. Instead of trying to determine it on your own, your best answers to your alimony questions can be provided by an experienced lawyer at The Law Office of Steven M. Bishop, CFLS. Your family law attorney will then review the issues specific to your case, advise you of what steps you can take legally, and help you understand what factors may impact whether you will be awarded alimony following a California divorce. You can schedule a free phone consultation at our San Diego office by calling us at 619-304-8417 or send us an email today to learn more.

Guide to Community Property Division in California

When you marry or register a domestic partnership in California, the state’s Family Codes determine your legal rights and responsibilities. As a legal couple, the state considers you a single entity. Almost everything you acquire during the relationship becomes jointly-owned community property. Before you finalize a divorce, legal separation, or partnership termination, you must document and divide everything you own. The law provides a legal framework for dividing your assets fairly, but the process is often complicated and challenging.

You have an opportunity to work out your own community property division arrangement. If you can’t agree, eventually a judge will make decisions on your behalf. As a Certified Specialist in Family Law, Attorney Steven M. Bishop can help you resolve your community property concerns. We understand that the process is often emotional and complicated, so we’ve created a guide to help you understand the basics.

What is Community Property?

Community property includes all of your real property and personal property. To determine an equitable distribution, the court requires a complete assessment of everything you, your spouse, or your partner earned or acquired during your marriage or domestic partnership. When you legally separate, divorce, or terminate your partnership, your community property is subject to a 50/50 division. If you’re like many couples, your assets often include:

  • A residence
  • Household furnishings
  • Shares of a business
  • Stocks and bonds
  • Jewelry
  • Cash
  • Bank accounts
  • Vehicles
  • Pension plans
  • Proceeds from a pending personal injury suit or claim
  • Assets in other jurisdictions
  • Clothing and personal effects
  • Pets

Quasi-Community Property

Quasi-community property is an asset you, your spouse, or partner acquire in another state during your marriage. If you lived in the property’s jurisdiction, you and your property could be subject to that state’s laws or guidelines. When you’re divorcing or terminating your relationship in California, your property is simply treated as community property.

Special “Pet Animal” provisions

Some people see their pets as members of the family. During a divorce or termination, this often triggers an emotional ownership dispute. Recently, California became one of many states to consider a pet’s welfare during divorce proceedings. While pets are still considered community property, the law leans toward the idea that they are also sentient beings. In granting sole or joint ownership, a judge must consider “…the care of the pet animal…” It’s similar to how a judge would evaluate a child custody situation.

What is Separate Property?

Separate property is income or assets that belong only to the acquiring spouse or partner. One example is a car that one partner purchased with their own money prior to formalizing a domestic partnership. The car is considered separate property. It isn’t subject to division as community property if it meets one or more of these conditions.

  • A spouse or partner acquires it before marrying or forming a legal partnership.
  • It was purchased with assets acquired before formalizing the relationship.
  • It’s a gift or bequest given only to one partner or spouse during the relationship.
  • It was purchased with money from a gift or a bequest given only to one partner or spouse during the marriage.

What is Commingled Property?

A commingling issue occurs when an asset has both separate and community property aspects. This occurs when one or both partners combine pre-marital income to buy a home or other property during their marriage or partnership. Both parties have a separate interest and a community interest that must be evaluated and negotiated when they dissolve their relationship. The separate and community interests can be difficult to evaluate unless the couple keeps detailed records of their separate contributions.

Who is Responsible For a Couple’s Debts?

California’s property division guidelines also apply to debts and liabilities. As a couple is legally a single entity, both parties are responsible for debts even if only one spouse or partner agreed to the debt. The 50/50 community disposition does not apply to debt a spouse or partner incurred prior to establishing a formal relationship.

Why Would You Need a Retirement Plan Joinder?

A retirement or pension plan is often a valuable joint asset. A judge will order the appropriate distribution as community property, but the process often requires more than an agreement or approval. Depending on the type of retirement plan, a divorcing spouse or terminating partner must join the retirement plan as a party to the divorce. Only then can a judge order the plan to make payments to the entitled spouse or partner.

Do I Have to Comply With a Premarital Agreement?

When a couple executes a premarital agreement, they have a minimal possibility of disputing its provisions. In drafting an agreement, a couple can choose the applicable law and jurisdiction. They can determine property disposition and limit most traditional post-marital rights and obligations. A spouse or partner has limited grounds for disputing a pre-marital agreement.

  • It violates public policy or a criminal statute.
  • One person coerced the other into signing the agreement.
  • It adversely affects a child’s right to support.

The Court Has Final Approval

Property often becomes an obstacle to a final dissolution or termination. That’s why the court has discretion in finalizing a couple’s assets distribution. If necessary, a judge will decide or refer the case for arbitration. If the assets have a value under $50,000, an arbitrator’s decision is non-appealable. Although the court encourages divorcing and terminating parties to create their own community property distribution arrangement, the court must eventually sign off on the details.

Contact The Law Offices of Steven M. Bishop

Dividing your assets at the end of a relationship is often an agonizing process. You must concentrate on acquisitions and values at a time when your emotions are too complex to focus. Attorney Steven M. Bishop is a Certified Specialist in Family Law. He has assisted clients with their most complicated property distribution issues. He welcomes the opportunity to do the same for you.

If you need assistance resolving any aspect of your dissolution or partnership termination, contact Attorney Bishop to schedule a consultation. Call our office at (619) 299-9780 or complete our Contact Form.

Is My Spouse Entitled to Half of My San Diego Business?

California has a divorce rate of 6.7 percent according to U.S. News. While California may not fall into the top tier of divorce rates, everyone understands divorce is not easy and there are always disagreements. One of the primary things spouses typically face challenges with is division of property. Since California is a community property state, making property division even more complicated, you should consult with a family law attorney immediately to ensure what steps you need to preserve your assets.

Understanding Community Property as it Pertains to Divorce

Community property is defined as “joint ownership of all property acquired during a marriage except property acquired by gift or will“. This rule also applies to debt incurred by spouses during marriage. The court  deems any property accumulated during the marriage as community property since the spouses equally shared in the acquisition of the property. This means in general, property and debt are generally divided equally between spouses at the time of their divorce.

Businesses Structured as Partnerships or With Multiple Owners

When a business is formed during a marriage in California in general it is considered community property. Should you form a business as a sole proprietorship, the decision by the court is easy: Your spouse would likely be entitled to half the business. There are other complex issues to deal with however including how the business is structured.

Clearly if your spouse is a partner, they are entitled to their portion of the business. However, there may be other partners in the business and there may be specific wording in the corporate documents which indicate each parties rights should they retire, divorce, or die while the business is still operational. In these cases, the family court would likely review the documents in making a determination about the disposition of the business, or the assets of the business.

Spouse Role in a Business May Impact Division

Another consideration which must be part of the discussion about your San Diego business when dealing with a divorce is the role your spouse may have played in the business. However, if your spouse had a part in the day-to-day operations of the business, there is a chance the judge hearing your divorce case may feel they are entitled to a portion of the business. The more involved the spouse, the more likely this is to occur, particularly if you and your spouse cannot agree between yourselves, or if you have an agreement which seems to treat your spouse unfairly.  These are issues you should discuss with your family law attorney when you are talking to them about your divorce and your business.

Exceptions to Community Property Rules

In addition to property which one spouse may inherit or have gifted to them, post and prenuptial agreements have an impact on property division. In the event an agreement specifies the business is considered individual property, then your spouse would not be entitled to half. The other case where property may be considered sole property is assets which were owned prior to the marriage. Keep in mind, if a business owner is divorcing and the business was started prior to the marriage the court may deem the business separate property.

When it comes to a business, there may be other complicating factors. For example, if a spouse starts a business using  funds which were bequeathed to them in a will, given as a gift, or which they had prior to the marriage, the rights of the spouse may come down to a determination by the courts. In some cases, the court may determine the business is entirely separate property, and in other cases, they may use other, more complicated calculations.

California Courts and Business Ownership

Family courts in California have specific ways to determine what portion of a business is considered community property. The first method is known as the Pereira method and the other is known as the Van Camp method. Here’s how they work:


  • Pereira Method – this calculation involves knowing the value of the business at the time of the marriage and the date of separation. Assuming the growth of the business is due to efforts during the time of the marriage, the increase in value is considered community property.  If one assumes at the time of divorce the business is worth $500,000 and was worth $100,000 at the time of the marriage, the $400,000 would be considered community property subject to equal division.
  • Van Camp Method – this method is used in circumstances where the court cannot determine that you had a substantial role in the businesses’ growth. This method is often used in cases of limited partnerships. In general, a spouse would be entitled to half the “usual” salary earned as a limited partner, and not the value of the business. The reasoning behind this is only that amount of money is considered community property.



Divorces are always complicated, and they become more complex when there are business interests at stake. When there is a combination of community property and separate property, division of assets is challenging. You need to work with an attorney who has experience dealing with complex divorce matters to represent you fairly, and to serve as your advocate. In some instances, we may be able to help you preserve more of your business than you might be able to preserve on your own.

Because community property laws can be confusing when it comes to a business, you need to discuss these issues with your divorce attorney as quickly as possible. We have also assisted those who fear their spouses may be using their business in an attempt to shield assets from divorce proceedings.

We know you have worked hard to grow your business and losing half of your business in a divorce could put your future financial security at risk. When you are concerned about the future of your business because you are going through a divorce contact The Law Offices of Steven M. Bishop, Attorney at Law, A California Corporation at 619-299-9780. We represent people throughout San Diego County in a host of different family law matters.

How Are Benefits Divided for Divorcing Service Members? 

Divorce is never easy. The process is even more complicated when a spouse is an active military member. As a military couple, your life begins changing when you decide to separate. Active duty assignments often dictate your housing, your children’s schools, childcare resources, and many other personal and family circumstances. As with every military-connected concern, very specific guidelines affect your benefits and entitlements, and your divorce process.

At The Law Offices of Steven M. Bishop, we recognize the complexities of navigating a legal system governed by both military and state statutes. We understand that the procedures for dividing military benefits are often complex. As a Certified Specialist in Family Law, Attorney Bishop works to protect your legal and financial rights, and he helps you meet each challenge.

Who Has Jurisdiction Over Your Divorce?

Several federal statutes affect whether a California court has jurisdiction over your divorce and related matters.

Filing Your Divorce Petition

As long as your military spouse doesn’t object, you have several filing options. You may file a divorce petition in your state of legal residence, your spouse’s state of legal residence, or the state where your spouse is on active duty.

Responding to Your Divorce Petition

A spouse may file a divorce petition against an active military spouse, but the Service Members Civil Relief Act, 50 USC §§ 3901-4043, sometimes prevents the court from taking further action. If a spouse files a divorce petition and the respondent’s military duty prevents active participation, the respondent doesn’t have to meet the court’s timetable. The court also has no right to issue a default judgment. Once a divorce is final, the military will comply with judgments based on a final decree.

Benefits Entitlement

Child Support and Spousal Support

The Defense Finance and Accounting Office will process child support and spousal support payments in compliance with a final divorce decree. The Consumer Credit Protection Act, 15 USC § 1673, limits the amount the DFAO can deduct from an active military member’s pay. They will deduct 50 to 65% of a military member’s disposable income. The maximum contribution percentage depends on the member’s contributions to all dependents, their percentage of a child’s overall support, and other factors.

Military Retired Pay Benefit

The Uniformed Services Former Spouses’ Protection Act, 10 U.SC., §1408, grants state courts the authority to issue a judgment based on a former spouse’s military retired pay. The award must be part of a property settlement and must be included in a final decree. The USFSPA also grants the Department of Justice the means to enforce a state order.

The 10/10 Rule

A divorced spouse may receive a portion of the spouse’s military retired pay only if they were married for at least 10 years during a period where the spouse had at least 10 years of military service.

The 20/20/20 Rule

An ex-military spouse is entitled to receive medical benefits and commissary and exchange privileges for life or until he/she remarries. This applies only if the marriage lasted 20 years or more, the spouse has 20+ years of military service, and the couple was married for at least 20-years during which the spouse was active in the military.

Military Service Often Contributes to Marital Discord

Members of the military are our heroes, but their marriages often suffer due to active duty separations and deployment in conflict zones. The Department of Defense examines the most common issues through their “Active Duty Spouses Well Being” surveys. The 2017 results show that 20% of military spouses encountered marital issues with 23% experiencing difficulty after the spouse returned from deployment. Of the spouses interviewed, 51% felt a “high level” of stress and 24% reported unemployment as an issue.

Military spouses also reported loneliness, difficulty handling family issues alone, personal and technical problems with spousal communication, childcare complications, and other issues. Sixty percent of responding spouses reported overall satisfaction with military healthcare, income, housing, grocery prices, and community support. Unfortunately, a divorce eliminates or restricts access to these benefits.

Post Traumatic Stress Syndrome causes marital problems as well. The Veterans Administration National Center for PTSD cites PTSD as having “…pervasive negative effects on marital adjustment…” Rates for the disorder vary depending on the military mission. Of those involved in recent engagements, the VA estimates that 11 to 20% suffer from PTSD.

Contact The Law Offices of Steven M. Bishop

Military divorces are often complicated because they are governed by multiple state and federal guidelines. As a Certified Specialist in Family Law, Attorney Bishop provides compassionate service and helps military spouses work through this complicated process. Reach out to us at (619) 299-9780  or complete our Contact Form to arrange a consultation.

Can I Relocate My Kids Out of State During Divorce Proceedings in California?

One of the most difficult hurdles during a divorce proceeding every parent will have to deal with is the one pertaining to their children. Unfortunately, while both parents usually agree the well-being and safety is of utmost importance, oftentimes, they disagree on what is required to keep their children safe.

In some cases, one parent may be faced with the decision to relocate, often out of state, for job needs, to be closer to immediate family, or for other reasons. However, before you make that decision on your own, it is important to understand your rights, as well as your obligations under California’s laws.

Relocating a Child During Divorce Proceedings

If you have been awarded sole legal custody during a divorce proceeding, you can move with your child to any location deemed safe for the child. However, keeping in mind that the other parent may opt to request the court to intervene, particularly if the custody order under which you have custody is a temporary one.

In this case, you should seek guidance from a qualified family lawyer who can help you determine whether your order is temporary or permanent. This could save you legal problems because while you have the right to move out of state, the other parent could dispute that right.

Divorce Petitions and Relocation of Children

Some parents want to move out of state immediately after being served a divorce petition. This is a bad idea – Chances are, your petition also included a restraining order. These orders are called “automatic temporary restraining orders” and they are in immediate effect and prohibit the removal of a child from the state without written consent from the other parent.

If you have physical custody of your child, and the child’s other parent has visitation rights and you have a concern they may consider moving the child to another state, you should speak with your attorney immediately.

Understanding Divorce and Custody in California

The first thing you should do is make sure you have an attorney who understands family law. This is important because you want someone who is going to serve as an advocate for you, and for your children.

Child custody in California can be complicated, and orders awarding custody are subject to modification. However, the basics of custody are:

  • Physical custody – this means the child is assigned to live with one parent full time while the other parent typically has visitation rights. Depending on various factors, visitation may be supervised or unsupervised.
  • Sole legal custody – this means one parent makes important decisions for the child. This includes where the child will attend school, makes decisions about religious upbringing and other decisions in the best interest of the child.
  • Joint legal custody – this form of custody allows both parents to have an equal say in important decisions pertaining to the child’s upbringing.
  • Joint physical custody – this can be more complicated than it sounds. Joint custody in effect means the child splits their time between both parents. There are some who believe this form of custody has a detrimental effect on the child, but nonetheless, this is often an agreement reached between parents or assigned by a court.

The Court and Relocation Considerations

In general, a parent who has sole legal custody of a child has the right to move that child to any location they prefer without consulting with the court or the other parent. However, this does not stop the other parent from requesting a relocation hearing because they do not feel the relocation is in the child’s best interest. Some issues the court will take into consideration during these types of hearings include:

  • How far away you intend to move with the child
  • Whether there is potential harm for the child if you were to move
  • What the relationship is between the child and each parent
  • What the child’s specific needs are including educational and emotional needs
  • The ability to maintain family relationships after relocation
  • Why the parent is opting for the move (personal relationship, job opportunity, family)
  • The child’s overall safety and stability after the move

Understanding Custody Agreements

Parents who are considering relocation must have a firm understanding of final custody agreements before making such a move. Even where a parent has sole custody, and therefore the legal right to relocate the child, the court may ask the reasons for the relocation. In some cases, if the court feels the relocation is not in the best interest of the child, they may prevent such a relocation from occurring.

Custody, Visitation and Traveling Out of State

Parents who share custody, or have visitation agreements also need to understand that either parent who has physical custody of a child at any time is free to cross state lines with the child and go anywhere they choose. The only limitations to this is if a parent has expressed concern about the safety of their child and the court deems that out of state travel would be detrimental to the child. If you believe your child could potentially be in danger traveling out of state, you may be able to seek a modification of your existing agreements pertaining to visitations. Seek guidance from your attorney regarding this issue as soon as you believe it may be a problem.

Contact A Certified Specialist in Family Law

Family law is a very specific type of legal practice and it is important for you to work with someone who has experience when it comes to issues that pertain to your children, their safety, and their well-being. At the Law Offices of Steven M. Bishop, Attorney at Law, A California Corporation you will find a certified specialist in family law who has experience handling numerous cases pertaining to child custody issues. We understand your concerns and are familiar with California custody laws and can help you understand your legal rights and help you fight to keep your child in the state if you are concerned their other parent is going to move them impacting your relationship with your child. Contact us today at 619-299-9780 and schedule a free consultation and let us help you with your relocation issues and concerns.

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Discuss Your Case With An Experienced Family Law Specialist

To talk to our lawyer about your family law issue in a free telephone consultation, please call our office at 619-299-9780. You may also send us an email. We represent people throughout San Diego County in a host of different family law matters.

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The Law Offices of Steven M. Bishop, Attorney at Law, A California Corporation

591 Camino De La Reina, Suite 700

San Diego, CA 92108

Phone: 619-299-9780

Fax: 619-299-0316

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