Legal Question in Business Law in California

Re: Married with potentiall successful business

The question is not that easily answered, and when answered, it will not be with a simple "she's right" or "she's wrong." By the way, this is really a "family law" question and should have been asked under that category for the most and best answers, but I'll try to give you a rough explanation of how this works.

First of all, property that you owned before marriage remains your separate property unless something happens to alter or "transmute" its separate-property character. With cash and its equivalents, this commonly happens by commingling of separate and community funds in the same account. Transmutations of property also occur by gift, sometimes unintentionally.

With an incorporated business, if you kept the stock separate - like maybe 100 shares of General Electric in your safe deposit box - there is little to no chance that your wife would ever acquire a community interest in it. Same with a small business of which you are 100% owner on the date of marriage IF it is a hands-off, no personal involvement situation.

However, most owners of small 100% owned corporations work in them or put additional money into them from time to time. When you invest time or community money in "your" business after marriage, you are creating a community-property interest. Remember, your time, work and efforts after marriage are on behalf of the community, and very likely any cash you invest in "your" corporation after marriage will by community cash.

So, the name on the stock certificate does not tell the whole story. The corporation, once 100% your separate property, will gradually (or maybe rapidly) acquire a community-property aspect. The community is said to have acquired a "pro-tanto" interest. "Pro tanto" is legal Latin for "a certain extent" and the actual community interest is determined under one or another of several formulas the courts have developed to weigh the relative effect of separate and community inputs on the business value.

I think it is very unlikely your wife's interest is bigger than 50%; probably what she means is that the community-property interest is more than 50%, which is very possible; but remember the community is half yours.

Finally, I hope you and she can get these suspicions and differences of opinion worked out so they aren't a cloud on your marital happiness.

Re: Married with potentiall successful business

Your both wrong.

She is entitled to 1/2 of the value of the business that accrued during the marriage (that might be all, even if it started prior).

Joel