What to do but a business and commnity property?
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What to do but a business and commnity property?
I started a successful sole proprietorship 22 years ago, then 4 years later I got married. Then 7 years ago, I changed the business to an S-corp, with me alone holding 100% of the shares. Based on the business being an asset I brought into the marriage, can I claim it is not subject to community property law? My ex feels entitled to 50% of the business, based on the S-corp being formed 7 years ago.
Asked on December 10, 2012 under Family Law, California
Answers:
Cameron Norris, Esq. / Law Office of Gary W. Norris
Answered 11 years ago | Contributor
Generally, community property is property acquired during the course of the marriage. Any interest in your business that you developed BEFORE marriage is a separate property interest. Generally, the increase in the value of the business during the course of the marriage is community property.
So, she would be entitled to one half of the INCREASE in the value of the business during the marriage. There are a few different ways of calculating that increase (lookup Perreira and Vancamp). However, if you business decreased in value during the marriage, then there would be no community interest at all.
You should really consult with a local family law attorney and have them help you in this matter. These are surprisingly complicated legal issues and you want to ensure the best resolution to your case.
Cameron Norris
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