Business owned before marriage

[newt_k]

California

I started my small business 1 year before getting married. After 8 years of marriage the value of the business has increased substantially and we're getting a divorce.

The wife doesn't work in the business full time, but has done many tasks to contribute over the years. Does the law entitle her to half, or how does it work?

 

[LdiJ]

California

I started my small business 1 year before getting married. After 8 years of marriage the value of the business has increased substantially and we're getting a divorce.

The wife doesn't work in the business full time, but has done many tasks to contribute over the years. Does the law entitle her to half, or how does it work?

What kind of business is it? Is it something that is divisable or saleable without you at the helm? For example, if its a plumbing business and you are the only plumber, there really isn't much to divide. But if its a plumbing business with 20 plumbers as employees, then that changes the picture considerably.

 

[newt_k]

What kind of business is it? Is it something that is divisable or saleable without you at the helm? For example, if its a plumbing business and you are the only plumber, there really isn't much to divide. But if its a plumbing business with 20 plumbers as employees, then that changes the picture considerably.

Night clubs. 40+ employees.

 

[msiron]

Prepare to cough it up.

 

[tranquility]

The community is almost certainly going to be entitled to a substantial portion of the business.

 

[newt_k]

So, no different than if it opened after we were married?

Out of curiosity, what if she never did anything related to the business?

 

[msiron]

So, no different than if it opened after we were married?

Out of curiosity, what if she never did anything related to the business?

You said she did not work full time (what you meant was over the table & on the books, right?) and you said she's done MANY tasks over the years to contribute. wtf

 

[newt_k]

You said she did not work full time (what you meant was over the table & on the books, right?) and you said she's done MANY tasks over the years to contribute. wtf

She was not paid a salary and didn't have any specific job. She'd help out for what amounted to a few hours per week on average. Sometimes more, sometimes not at all. Not saying that's a bad thing, just clarifying her involvement. If it even matters.

I was asking that last bit, "what if she did nothing," as a hypothetical.

 

[tranquility]

What *she* did is not the key, it's what *you* did. There are two basic types (assuming no co-mingling which would make it worse as a percentage ownership) of transfer of separately-owned business to the community. The first depends on a business which pretty much runs itself and the profit comes from the capital investment. The other comes from a business which substantially benefits from your work. I suspect a nightclub benefits from your work for the most part. It's all facutal and certainly can be argued, but the community would be entitled to the portion of the business which improved on the basis of your work. What you or what she did is irrelevant, what both of you combined did is relevant. Even if she did nothing, if you improved the business from through the years, the community is entitled to the work you did. (Which will then be split.)

 

[newt_k]

What *she* did is not the key, it's what *you* did. There are two basic types (assuming no co-mingling which would make it worse as a percentage ownership) of transfer of separately-owned business to the community. The first depends on a business which pretty much runs itself and the profit comes from the capital investment. The other comes from a business which substantially benefits from your work. I suspect a nightclub benefits from your work for the most part. It's all facutal and certainly can be argued, but the community would be entitled to the portion of the business which improved on the basis of your work. What you or what she did is irrelevant, what both of you combined did is relevant. Even if she did nothing, if you improved the business from through the years, the community is entitled to the work you did. (Which will then be split.)

Yes, I manage the places and built the brand.

To complicate things more, or maybe not, I have a business partner. It's a 50/50 split, but he's a silent partner and doesn't work at the places. So, am I hearing that she's entitled to half of my share, or 25%?

 

[LdiJ]

Yes, I manage the places and built the brand.

To complicate things more, or maybe not, I have a business partner. It's a 50/50 split, but he's a silent partner and doesn't work at the places. So, am I hearing that she's entitled to half of my share, or 25%?

Pretty much....or at least 25% of the value of the business. You might be able to negotiate it down a few percentage points since you were in business 1 year before the marriage, but you better be looking at ways to either raise the cash to buy her out....or to trade other assets in exchange for the business.

She is entitled to 1/2 of the community property and responsible for 1/2 of the community debt. That doesn't necessarily mean that it has to be 1/2 of each separate item, it just has to be 1/2 of the total.

 

[Bali Hai]

Yes, I manage the places and built the brand.

To complicate things more, or maybe not, I have a business partner. It's a 50/50 split, but he's a silent partner and doesn't work at the places. So, am I hearing that she's entitled to half of my share, or 25%?

Hang on to the Mrs. a while longer and incorporate the business. Then tell her to go fly a kite.

 

[kdhohio]

Bali....Maybe legal but certainally not nice lol

From the wife of a business owner

Although husband found it hilarious

 

[LdiJ]

Hang on to the Mrs. a while longer and incorporate the business. Then tell her to go fly a kite.

Incorporating the business would not change anything at all....why in the world would you think that it would?

 

[seagoing]

Wonder what would happen if it was the Bada Bing,and Tony was a partner