Business Of Divorce: You have an idea for a business and take the entrepreneurial plunge! Then, just when things start picking up at work, life at home falls apart. What happens to your business if you decide to divorce?
You have an idea for a business and take the entrepreneurial plunge! Then, just when things start picking up at work, life at home falls apart. What happens to your business if you decide to divorce?
California is a community property state, which means that after you exchange your vows, all income generated by you and your spouse is shared equally between you. Agreements, inheritance, or separate property may change the equation but generally, your spouse owns half of your business. The California courts have determined that the labors of one spouse should benefit the other, so it won’t matter that the business is held only in your name or that your spouse works elsewhere. Your spouse may still be still entitled to half.
The best way to ensure that you reap the rewards of the long hours you spent building your brand and business is a written agreement with your spouse. Prior to marriage, it is referred to as a prenuptial agreement; after marriage, it is called a post nuptial agreement. Such agreements are crucial to changing the parameters of how a married couple will divide, or not divide, an asset such as a business. Upon divorce, without such an agreement, a judge presiding over a dissolution of marriage could have broad discretion to divide, sell, or transfer your business.
Dana M. Heyde is a contributing blogger for NAWBO. Read the rest of this article here.
