DID YOU KNOW BY ATTORNEY F.M. ZAVALA

Family Court-Ordered Sale of Business

If the issue is whether a family business should be sold instead of awarded to one party, additional considerations apply. Although courts may order the sale of a business and division of its proceeds in order to achieve an equal division of the community estate, one appellate court suggested that ordering a sale may be an abuse of discretion. That court stated that a sale to a third party should not be ordered if the trial court finds that (1) either party is capable of operating the business, (2) each seeks its award, and (3) each can purchase the other’s share. Even if the business is difficult to value, and the trial court faces difficulty in determining to whom to award it, if both spouses have been operating the business and both want it and can purchase it, such as through an offset of other property to “cash out” the other spouse, it will usually be an abuse of discretion not to award it to one of the spouses. In re Marriage of Cream (1993) 13 Cal. App. 4th 81, 89–90, 16 Cal. Rptr. 2d 575