San Diego Divorce Attorney Serving Business Owners
At the Law Office of Renkin & Associates, we cater to business owners and other high-net-worth individuals who are looking for experienced representation to secure their assets during their divorce. Unlike other law firms, we don’t just take on any client who comes our way. We choose to represent business owners – savvy individuals who often have the most to protect and the most to lose if they do not have an experienced advocate fighting for them in negotiations and in court.
If you own a business and are considering filing for divorce in San Diego County, or if your spouse has filed or may be planning to file, we can help you protect your business and other assets. Contact us today to schedule a confidential case evaluation with Richard Renkin.
Divorce Services for San Diego Business Owners
If you and your spouse may be going separate ways, you are right to be concerned about how your divorce will affect your business. California’s divorce laws are complex, and one of the areas that is most affected by these complexities is the ownership and management of privately-owned businesses. While your spouse may claim that he or she is entitled to partial ownership or control, the truth is that there are numerous factors – and steps you can take – that will impact the distribution of assets in your divorce.
When we represent business owners going through a divorce, we focus on ensuring that our clients can retain maximum ownership and control of their companies. We have extensive experience representing business owners, and we know the arguments that can be successful in protecting business owners’ rights.
Q. What Do I Need To Know About Business Ownership and Divorce Proceedings in California?
A. If you are preparing to file for a divorce, or a domestic partnership dissolution,
it is important to consult with an experienced San Diego divorce lawyer before filing your paperwork. If you are a business owner and you are concerned that the business can be controlled by your ex, only a qualified California family law firm will be able to help you sort through the complexities of the process.
It Has to Be Determined if the Business is Community or Separate Property
In the state of California, all community property of the marriage or domestic partnership is divided up between the two parties in a marriage settlement agreement. Not all property owned by one party is considered community property. Assets that were inherited by one spouse or assets that were earned prior to marriage are considered separate property. If you owned a thriving business prior to getting married, the business is your separate property and will be treated as such in a divorce proceeding in San Diego.
You and Your Spouse Started the Business Together
If you and your spouse started the business together, you will have to decide if you want to be the one to continue running the business. As a piece of community property, both parties are entitled to half of the value of the property. If you are both on the registration paperwork, and you both have a say in how the business is run, you will have to buy out your spouse in order to retain control of the business.
The Business Is a Family Business You Inherited from Your Parents
If the business you are concerned about is a business that you inherited from your parents, your ex is not entitled to half of the business assets. If you have been wise, and you have kept your business completely separate from your marriage, then the business you inherited is yours to keep. If you added your spouse to the business incorporation paperwork, gave your spouse a title, and allowed your spouse to have control in the business proceedings, they may be entitled to some of the assets. If the business grew as a direct result of your spouse’s involvement, it is likely that this will be taken into consideration.
As with any divorce that involves a business, your business value will have to be determined by a third party. An accountant or valuation team will consult all of your business records and determine what your business is worth at this time. Future earnings are always considered when valuation is determined, and your current success in your business can result in a higher payout to your former spouse.
When you are concerned that your spouse is going to be able to control your business assets, it is best to get prepared before filing for your divorce. Encourage your spouse to find other employment and remove responsibilities from your spouse if at all possible. Gather together information that proves you are the primary business owner and allow a third party to come in and assess your business for the court system.
Predicting how the division of business assets in a divorce will play out is not a clear science. The judge typically has the power to make the final decision, so it is up to your lawyer to present a compelling, fact- based case as to why you should benefit by getting more from the business. If these facts are not clearly presented, the judge will be making an ill-informed decision, which may not be in your favor. This is one of the many reasons that you need not just a good divorce attorney but the best divorce attorney.
If you are considering a divorce, there are several things that you can do to prepare yourself for the inevitable. Even if your divorce starts out amicably, there is no guarantee that it will stay that way. When there are assets or children involved, you should always hope for the best but plan for the worst. Settling outside of court is always the goal, but it is unwise to count on that being the outcome.
There are things we can do in advance that will make the division of business assets in a divorce go more in our client’s favor. Here are some suggestions to consider while planning for your divorce.
· How involved is your spouse in the business? If your spouse does notactually work in the business, do not put them on the payroll, give them a title, or business cards. While there may be tax advantages to this strategy, it creates unnecessary issues. Simply give yourself a larger paycheck and take care of the household through your earnings.
· Is your spouse on the registration documents? If you file for divorce and your spouse is on the incorporation documents, they will continue to have access to the business funds even if they are not actually working the business. This gives them the ability to act on behalf of the corporation and will tell the judge that they are involved and deserve a considerable piece of the pie.
· Does your spouse work anywhere else? If your spouse is not working, you should at least encourage them to volunteer or become involved in other community activities. This will help them transition when you do have a divorce and show further proof that they are not actively involved in the company.
· Who signs the contracts? If you want to be perceived as the primary owner of the business, you need to be the one signing all of the business contracts that your company enters into. Having your spouse sign them proves their involvement.
· What is your business history? If you have both been involved in the business, a judge is likely to look at your business history to determine if you were married when the business started and if you both worked the business full-time from when it was created to the divorce filing. If one of you temporarily worked elsewhere, that will be taken into consideration and may show that you are or are not the primary business owner.
· Business assets and debts. A judge will likely make a ruling as to the distribution ofassets and debts including the business. It is important that you have a paper trail backing up any claims you have to an asset or why your spouse should be responsible for a certain debt.
· Obtain a business valuation. The judge may require one of you to buy out the other party. If this is the case, you need to know what your business is worth by obtaining a third party report.
Divorce is complicated and never easy. While it may feel uncomfortable to plan for your divorce, prior to filing or talking to your spouse, this is the best way to protect yourself and your assets. Once the process has been started, it is difficult to maneuver as the other side may get court-ordered limitations that would prevent you from accessing money or making any major business decisions. Contact us for a case evaluation to learn how we can help.
Learn more in these articles written by San Diego divorce attorney Richard Renkin:
- Need to Know – Business Ownership & Divorce
- Is My Wife Entitled to Half of My Business if We Divorce?
- Determining the Division of Business Assets in a Divorce
- California Divorce and Business Ownership FAQs
- Domestic Partnership Divorce & Business Ownership
For additional steps you can take to protect yourself, read How to Divorce-Proof Your Company.
New Divorce Statistics Released – Divorce Rates Lower Than Previously Believed
Although divorce has only become more and more socially accepted each decade, divorce rates have begun to go down since their peak in the late 1970s and early 1980s. According to an article by The New York Times, “Those who married in the 2000s are so far divorcing at even lower rates. If current trends continue, nearly two-thirds of marriages will never involve a divorce, according to data from Justin Wolfers, a University of Michigan economist.” What is causing the decline in divorce?
People are Postponing Marriage
In the 1950s, the average age for marriage was 20 for women and 23 for men. In 2004, it was 26 for women and 27 for men. Nowadays, people are postponing getting married because they are waiting for the right partner or because they cannot afford it until they have been out of school for a few years. Many people get divorced because both spouses have changed since the initial wedding. By waiting, people are doing this changing before they meet or commit to their life partner.
People are Avoiding Marriage
Now that cohabitation is less and less taboo, many people are choosing to avoid marriage altogether. Many people who are children of divorced parents are not concerned with putting a label on their relationship. Furthermore, not only are there fewer unplanned pregnancies because of the rise and effectiveness of modern forms of birth control, there is also less pressure for a couple to get married just because they have gotten pregnant.
More People Have College Degrees
People with college degrees still tend to get married, but their divorce rate is lower than couples that do not boast a college education. The more educated a couple is, the less likely they are to divorce. According to the New York Times article, “[o]f college-educated people who married in the early 2000s, only about 11 percent divorced by their seventh anniversary, the last year for which data is available. Among people without college degrees, 17 percent were divorced.” The rate of divorce for couples without a college degree has remained about the same since the 1980s.
People are Marrying for Love
Now people tend to get married because they want to express their love and commitment to their spouse instead of just because it is something that everyone does. A young couple that is living together nowadays and breaks up might have gotten married and then divorced if they had been born a few decades earlier.
These statistics do not take into account the number of couples who have cohabitated for many years or even had kids together before breaking up. Many couples might also choose to stay together even though they are unhappy.
Although the divorce rate is no longer the oft-cited 50%, at least not for marriages that were entered into in the last decade and a half, over a third of marriages still end in divorce.
One of the first things couples factor in when they are contemplating a divorce is how a marital change would affect their children, if they have any. Many couples even opt to stay married for the sake of their children. Parents may worry that all of the change and the constant shuffling of children between houses will be hectic and unfair to their kids. However, studies have shown that children of divorce do not necessarily develop more poorly than children with parents that stay married. Furthermore, there are many living options that have been growing in popularity lately that attempt to prevent children from being adversely affected by a divorce.
Bird-nesting is one unconventional method that has been gaining a lot of traction in recent years. Basically, while the kids stay put in the home that they lived in before the divorce, the parents take turns living in the house. This method may be easier on the kids, especially if they are a little bit older and have friends who live in the same neighborhood. Bird-nesting might also be financially beneficial to the former spouses. The parent that would have been kicked out of the house will not have to find a new place that is big enough for him or her and the kids. Some parents might even opt to spend their time when they are not at the house living back at home with their own parents since they will not need extra space for children’s visits, or the co-parents might just rent one extra place for each of them to use separately when it is not their turn with the kids.
Living in the Same House
It could be the plot of a Lindsay Lohan movie, but some couples – even after they are divorced – opt to live in the same house or in a guesthouse near the main house. Some make this tough decision so that they both get equal time with the kids, but finances also play a role in this choice for many ex-couples. Although it may be difficult to see your ex-spouse every day, not renting or buying an extra apartment or house can save a lot of money – especially at the beginning of a divorce. This method will also save time that might otherwise be spent arguing over schedules and driving the kids back and forth between houses. Before trying this method, it is recommended that you consult with an attorney to make sure that your state does not have strict separation timeframes that are required before a couple’s divorce is granted.
Conventional Custody Schedules
Getting a divorce does not mean you have to reinvent the wheel. Many children have been raised by divorced parents and have grown up just fine despite switching off between two different parents’ houses. The important thing is to find the schedule and situation that works best for your family.
Is One Billion a Fair Divorce Settlement
Is $1 Billion a Fair Divorce Settlement?
The answer to that question appears to be the only thing that ex-couple Harold Hamm and Sue Ann Arnall can seem to agree on: no. Oil entrepreneur and multi-billionaire Harold Hamm, the CEO of Continental Resources, originally called the settlement “fair and equitable” but has since changed his tune. His ex-wife, a former attorney and manager for Hamm’s company, also appealed the settlement amount, claiming that it was was unfair. With this being one of the largest divorce settlements in recorded history, it’s important to find out: who is right?
The Ex-Husband’s Case
Hamm already owned 68% of Continental before he got married. Although he is respected as an experienced and successful businessman, Hamm claims that the price of the Continental stock he owned became higher-valued because of the increase in oil prices and other factors over which he had control. He is not just being modest. Under Oklahoma law, if assets are accrued during marriage from passive rather than active sources, they may not be divided equitably between the divorcing spouses. By arguing that the increase in his net worth was due to passive luck instead of his or his wife’s hard work may save him hundreds of millions or even billions. Although Hamm initially agreed to the $1 billion settlement agreement, he now claims that the figure is too high. Previously worth $19 billion, his assets have decreased by more than 50% to just over $9 billion, most likely due to the recent sharp drop in oil prices. This sharp passive loss may also fuel his claim that the value of his stocks only went up because oil prices climbed over the decades since he started the company in the 1960s. Although the couple was legally separated in 2012 (despite filing for divorce twice beforehand), Hamm has attempted to get the legal separation date restated as 2003 so that Arnall would not be entitled to anything accrued after that date. This change would have been substantial, considering Continental went public in 2007.
The Ex-Wife’s Case
Following the award, Arnall asserted that the settlement amount is less than 10% of the wealth that was accrued during their 26-year marriage. Although Hamm started the company before their marriage, it was only valued at $50 million when they got married. Furthermore, as a former executive of Continental, she pointed out that she was instrumental in amassing this fortune. A lawyer at the company, Arnall was involved in winning lawsuits against competitors. She worked at Continental from the 1980s until 2008, including time spent as a manager. The couple had no pre- or post-nuptial agreement, and Arnall contends that Hamm refused to put property in both of their names during their marriage. Arnall has subpoenaed documents in an attempt to establish Hamm’s business savvy to show that he was instrumental in increasing the company value and to show that the gains were not merely passive.
How Is a Military Pension Currently Divided in a Divorce?
When you divide a pension in a military divorce, you can handle it two different ways:
1. Treat the Pension as an Indivisible Asset.
The first option is to treat the pension as an indivisible asset, which results in the service member retaining the full pension while for his or her spouse takes a share of the couple’s remaining community property that is roughly equivalent in value to the value of the pension. While this option still presents a number of challenges (including placing an appropriate value on the future anticipated payments from the pension), it can in some circumstances be the simplest option for all parties involved.
Here’s an example of how that might work: The spouses are in agreement that the service member will retain full rights in his or her pension, so the question becomes, “What does the other spouse get in exchange?” Let’s say the pension is valued at $200,000, and let’s say that the couple’s primary residence is worth $400,000 and subject to a $200,000 mortgage. In this scenario, the parties may agree that the non-service member spouse will get to keep the family home (and assume full responsibility for the mortgage), while the service member keeps his or her pension in its entirety. If this is agreeable for both parties, it will be a relatively straight-forward resolution that avoids the potential issues associated with dividing pension payments down the line.
2. Divide the Pension Income.
The second option is to divide the pension income once the military service member retires. Under the USFSPA, this division is done “if, as and when” pension payments are made. This means that the non-service member spouse is entitled to a share of the pension based not upon the service member’s rank and years of service at the time of the divorce, but rather at the time of retirement.
Here’s an example of how that might work: Both spouses are committed to the pension, and they agree to divide it equally in their divorce. The military service member is a Staff Sergeant with 10 years of service at the time of the divorce, and retires ten years later as a Major. In this scenario, the non-service member spouse would be entitled to half of the actual pension payments based upon the service member’s rank and years of service at retirement (i.e. a Major with 20 years of service), not at the time of the divorce. This may soon change.
Senate and House Considering Bills to Change Military Pensions in Divorce
The U.S. House and Senate are currently considering alternate versions of a bill that would drastically change the way that military pensions are divided in a divorce. Under both versions, the non-military spouse’s share of pension income would no longer be based upon the service member’s rank and years of service at the time of retirement. Rather, the spouse’s share would be determined at the time of divorce. The Senate version provides for an adjustment based upon the current rank pay rate at the time of retirement, differentiating it from the version currently pending in the House.
If either version of the bill is passed, the change could have a substantial impact on how military families address pension income in their divorce. Say, for example, a couple gets divorced while a spouse on active-duty has two years of service. If he or she retires 33 years later, under the proposed bill the non-service member spouse would only be entitled to a share of the pension at the two-year payment level, not the 35-year payment level that would apply under the current law.
We will continue to monitor these important bills in Congress for further developments.
A Divorce Can Affect Stocks
Because stocks are part of the assets or wealth in a marriage, they need to be divided between the two spouses. Transfer of stocks incident to divorce is a common occurrence at brokerage firms.
People who are continuing to work and make contributions to their employee retirement plans in the midst of a divorce should seek legal help regarding equitable division. Not all stock options are vested, meaning that they are not disposable at the time of divorce.
How Stocks are Divided During Divorce
All states consider “vested” stock options (belonging to the employee and subject to forfeiture upon expiration) property subject to distribution. These options are not easy to divide, even if they are publicly traded companies. Moreover, most states regard non-vested stock options as property. There are a few states that currently prohibit the distribution of non-vested options in a divorce case. It isimportant to check with a lawyer to determine your state’s position on this vesting/non-vesting matter as well as a careful review of the company’s option plan. Some plans do not permit a spouse to hold options while other plans do.
One of the preferred methods that the court can use to determine value of stocks that are not vested is to use the percentage method. This method gives each person a percentage of the value of the stocks or retirement plans at the time they are distributed.
Furthermore, the spouse receiving transferred stock is taxed on the gain or loss upon selling the stock in the future. This is calculated as the difference between the sale proceeds and the cost basis. The cost basis of the recipient spouse is the same as the cost basis as the transferring spouse.
What to do With Stocks During a Divorce
What is a non employee spouse to do? First, obtain complete discovery regarding your spouse’s employment assets. Carefully review the summary documents and handbooks for all employee stock purchase plans. Get copies of all employment contracts,stock grants,Securities and Exchange Commission filings for relevant employment periods,and any other documents, letters or memorandums regarding your spouse’s employee benefits and compensation.
Why Hire a San Diego Family Lawyer
Hiring a San Diego Family Lawyer
In today’s unsettling economy, many Americans are resorting to any means possible to save their hard earned money. Unfortunately, in the legal arena, some people attempt to handle family law or divorce cases without the aid of an attorney. By doing so, they potentially make matters much worse and ultimately cost themselves more.
An experienced Family Law attorney is well versed in the issues. We understand the complexities of the courtroom and the expectations of judges. Furthermore, we are uniquely prepared for opposing arguments and ploys the other side might attempt to use. We are competent and experienced in arguing the laws involving support, property disputes, and custody issues.
San Diego Family Lawyer Can Relieve Stress
At the bare minimum, each party in a divorce dispute should have a consulting attorney present to answer any questions, to ensure all of the documents are prepared correctly, to protect the client’s rights, and to avoid the client’s being taken advantage of.
There are some parties who have resorted to ‘paralegals’ as a cost-cutting measure. Although paralegals can provide assistance in document preparation, they are forbidden to render legal advice. Independent paralegals in California actually have lost the ability to call themselves “paralegals” in part because of real concerns about many have stepped across the line from document preparation to legal advice. As a result, these independent operators must now call themselves “legal document preparers.”
Hiring a San Diego Family Lawyer Reduces Risks
You should ask yourself if it is worth risking your child’s custody, support, or personal property by not retaining a qualified and experienced Family Law attorney. The court issues orders about your children, your income, your home, your bank accounts, your pets, your personal property, your retirement accounts, your business, your credit cards, etc. Everyone needs the protection and guidance of Family Law attorney provides.
Why Choose a Certified Family Law Specialist?
With nearly 30 years of legal experience, Richard Renkin has been a Certified Family Law Specialist since 2006. This means that he has not only met the requirements for certification, but that he has continuously met the extensive practice-based certification requirements for more than a decade.
Why choose a Certified Family Law Specialist? Because certification demonstrates both (i) extensive family law experience, and (ii) a steadfast commitment to helping clients successfully navigate their divorces.
Why Choose the Law Office of Renkin & Associates?
There are several law firms that handle divorces in San Diego. So, why choose us?
- Experienced Divorce Attorney – Richard Renkin has nearly 30 years of legal experience, and he has been handling divorces in San Diego County since 1991.
- Commitment to Divorce Representation – Unlike other firms, we focus exclusively on representing clients in divorces and family law matters.
- Focus on Representing Business Owners – We focus on representing business owners and other high-net-worth individuals. We know what you care about, and we know how to help you protect what matters most.
What Do Clients Say About Attorney Renkin?
Here is what some of our clients have had to say about attorney Richard Renkin:
- “We developed a strategy and Richard handled my case professionally to a successful conclusion. Everything was up-front and there were no hidden fees or other surprises in the process.”
- “I highly recommend Mr. Richard Renkin . . . the final outcome was better than the [other] family lawyers that I had interviewed [suggested].”
- “Richard was available, spoke plain language and clearly explained all of my options. The result of his work was exactly what I desired.”
Contact Us to Schedule a Confidential Case Evaluation
If you own a business and are preparing for a divorce in San Diego County, contact the Law Office of Renkin & Associates today to schedule your initial case evaluation. You will work with Richard directly throughout your divorce. To get started, we invite you to call 619-299-7100 or contact us online now.
- Can My Ex Take Ownership of My Business During a Divorce
Photo via flickr by Dmitry