Legal Question in Family Law in California

If I used inheritance to purchase a business and I'm married does that become community property.


Asked on 5/23/11, 9:31 pm

2 Answers from Attorneys

Leanne Gerritsen Law Office of Leanna M. Gerritsen

Not unless you specifically transmutate (alter the character of) the property from your separate property to community property. Your separate property contribution to the business will remain your own, and not be considered community property upon divorce. If you purchased 100% of the business with your inheritance, then the business is your separate. If you used comunity funds as well, the pro-rata portion is community property. However, the business itself will grow during marriage due to your community labor, and therefore the community will have interest in the business. There are two different methods for computing the community/separate property interest in such businesses: Van Camp and Pereira methods. You can read about these in detail online, and in fact Wikipedia has a good explanation.

Read more
Answered on 5/23/11, 9:43 pm

Ms. Gerritsen does not use proper legal terminology, and not even proper English grammar and syntax. It makes me wonder about her credentials to give any legal advice. She is correct, however, that unless you make a clear showing of an intention to TRANSMUTE (not "transmutate") separate property into community property, the property retains its separate property character. She is also correct, that as you operate a business during the marriage, the community will acquire an interest in the business. It is very similar to the situation if you took your pay for a job in a combination of salary and stock. The stock would be community property. Likewise the increase in the value of a business you own by yourself is like pay that you reinvested in the business. Since your pay is community property, the increased value of the business is at least partially community property. So unless you have been married a very short time, you have a mixed separate and community property interest in your business.

Read more
Answered on 5/23/11, 11:25 pm


Related Questions & Answers

More Family Law, Divorce, Child Custody and Adoption questions and answers in California