Which structure for protecting new business from divorce claims?

[Paul_Martell101]

What is the name of your state? Ca

J and M have been married for 5 years. M is unhappy and is contemplating divorce. J, who likes to plan ahead, is fearfull of a future with reduced income. J decides to start a new single person business called Wingding. J will fund Wingding with non-marital assets ( acquired as a gift made by a third party to spouse J but not M). M will not be involved in any aspect of Wingding operation (no financial, no administrative participation, etc.). What is the simplest business structure that would effectively protect current and future Wingding's assets and net worth from the claims of bitter M spouse , who will seek maximum retribution from Wingding through a divorce procedure?

C-Corporation, S-corporation, LLC with C or S-corporation tax election ?

Thank youWhat is the name of your state?What is the name of your state?

 

[divgradcurl]

What is the name of your state? Ca

J and M have been married for 5 years. M is unhappy and is contemplating divorce. J, who likes to plan ahead, is fearfull of a future with reduced income. J decides to start a new single person business called Wingding. J will fund Wingding with non-marital assets ( acquired as a gift made by a third party to spouse J but not M). M will not be involved in any aspect of Wingding operation (no financial, no administrative participation, etc.). What is the simplest business structure that would effectively protect current and future Wingding's assets and net worth from the claims of bitter M spouse , who will seek maximum retribution from Wingding through a divorce procedure?

C-Corporation, S-corporation, LLC with C or S-corporation tax election ?

Thank youWhat is the name of your state?What is the name of your state?

Talk to a local business lawyer. It may not be possible to completely shield your company from your spouse -- just because the company is funded with separate property doesn't mean that some community property -- the value of your time and effort -- isn't being used to establish and build the company, and your spouse will likely be entitled to a share of that community property. However, working with a good California business lawyer, you might be able to minimize the transmutation of your company into community property.

 

[tranquility]

Your work is community property. At the very least, the value of your work will need to flow to the community. The question comes up with the appreciation of the business during the marriage. The courts will make a determination where that appreciation came from: Capital or work. Is the chief contributing factor in the realization of the business profits com from separate capital or community labor? The key cases are shortend to Pereira and Van Camp (the fish stick people).

Pereira allocates a fair return on the separate property investment as separate income and allcates the excess to the community. Van Camp determines the reasonable value of the spouse's services, allocates that to community property and then treats the balance as separate property.

The form of the business is not considered. If I were involved with this, I'd be darn sure the gift was truly a gift and not a loan.

 

[Ken76065]

I am about to get a devorce. Angry wife in the state of Texas.

I want to start a business that will be internet based and national.
Does the below answer apply in TX.

Which option will protect the company prior to and after divorce?
Ken76065

What is the name of your state? Ca

J and M have been married for 5 years. M is unhappy and is contemplating divorce. J, who likes to plan ahead, is fearfull of a future with reduced income. J decides to start a new single person business called Wingding. J will fund Wingding with non-marital assets ( acquired as a gift made by a third party to spouse J but not M). M will not be involved in any aspect of Wingding operation (no financial, no administrative participation, etc.). What is the simplest business structure that would effectively protect current and future Wingding's assets and net worth from the claims of bitter M spouse , who will seek maximum retribution from Wingding through a divorce procedure?

C-Corporation, S-corporation, LLC with C or S-corporation tax election ?

Thank youWhat is the name of your state?What is the name of your state?

 

[quincy]

Ken76065, could you please start your own thread with your question? This forum prefers old threads are not revived with new questions by new posters.

This thread is from 2006 and involves California. Laws change over time and laws also differ in significant ways between states.

You can reference this thread in your newly created thread, if you like.

Thank you.