Can someone give me a sole partnership before losing half in a divorce.

[dvda]

Can someone give me a sole partnership before losing half in a divorce?

What is the name of your state (only U.S. law)? California

I am the de facto business partner in a company that has been operating since 2005. I co-run all the daily operations and get an equal split of the proceeds, but I am not on the paperwork because it was originally set up as a sole proprietorship by my partner and we did not make it an LLC until this year. It is now set up as an LLC with he and I having equal shares. He wants to give the company to me because his soon to be ex wife has been a drain on the company since the beginning and it's clear to everyone but her that she doesn't deserve to get half. On a separate note, he is fine with paying her a more than reasonable amount of spousal support.

My questions are:

Does the fact that we are now operating it as an LLC mean that she has any claim over the business that it was as a sole proprietorship? We have switched over all the old banking accounts and whatnot, but we are still operating under the same name. What are my/our options to retain as much of the business' worth as possible?

I've poured my heart and soul into this and I can't imagine it going into the hands of someone who has only been a thorn in its side. Thank you in advance.

 

[FlyingRon]

You should consult an attorney. The original business and his current membership in the LLC is almost certainly a community asset and his attempt to try to hide it from the property settlement is likely to come back badly on the two of you.

You should consult an attorney. Another question is what "assets" does the company have. You might do better starting out on your own with your list of existing customers (especially, if your "partner" doesn't want to have anything to do with the business anymore). Pouring your heart and soul into something doesn't give you ownership rights, it just makes you a good employee. I put my heart and soul and 23 years into my company and was rudely kicked out the door under new management.

 

[Taxing Matters]

My questions are:

Does the fact that we are now operating it as an LLC mean that she has any claim over the business that it was as a sole proprietorship?

The change to LLC isn't going to change things much. You may well have a good case to make that the business was a general partnership prior to the conversion to the LLC and thus that you have long been a 50% owner of the business. That would protect your share of the business. The problem is that his share of the business, whatever it is, is almost certainly a community asset meaning that his wife already owns half of that. How that gets divided up in the divorce will depend on what he can negotiate with her, or what he can convince a judge to order should negotiations not work out. She could possibly end up remaining as an owner of the business. Whether that would mean she would want to take a more active part in running it is another matter.

 

[HRZ]

Other posts suggest there is some room for creative flexibility in these matters ...but unless you want to risk losing all your sweat equity to his STBX I strongly suggest YOU get counsel darn soon .

And steps you take to aggressively protect your vIew as to your share or interests might not be under same dark cloud as his efforts to shield his whatever's ... I would take great care not to conspire with my business partner or co owner to hide assets from STBX

I would be seeking business savy legal counsel darn soon !