Legal Question in Business Law in California

This is an issue that has been litigated often in the past, resulting in some sound but rather complex case-law rules. The basic answer is that a spouse can have an interest in the other's incorporated business under ordinary community-property concepts. Even if the business were separate property at the time of marriage, when either the owner or the non-owner spouse works in the business or invests community funds in the business, the non-owner spouse will begin to have an interest. After many years, the interest can become very substantial. The rules for figuring the percentage or dollar value of that interest are pretty well worked out in the court decisions, but require an analysis as to whether and to what extent the business has grown due to personal efforts, outside capital, and other factors.

For details, check Google for discussion of the "Pereira" and "Van Kamp" cases which, taken together, and along with more recent cases interpreting and refining those two decisions, pretty well expresses the law on financial interests in a spouse's business.

The question of ownership is different from the right to manage and control. Under Family Code section 1100 and general rules of corporate governance, the spouse that has control through stock ownership "of record" and/or who has tradeitionally run the business will probably have and retain the right and manage and control the business, incorporated or not.