California is a community property state, which means that after you exchanged 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 work 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, assets 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.
The attorneys at Cottle Keen Lopiccolo & Heyde Of help business owners make decisions to protect their future. We also have experience dividing businesses during dissolutions.