In Divorce Do I Have An Interest In My Spouse's Business Started Before Marriage? When A Business Started Pre Marriage Has A Community Interest.
A common question posed by our divorce clients to our CA Bar Certified Family Law Expert Marcus Morales is the following, "If my spouse started a business before marriage, do I have claim to any part of the business upon divorce?"
Any business or property acquired before marriage is separate property. See Cal. Fam. Code § 770(a)(1). But, the community is entitled to a portion of the businesses value in a number of situations. One, is if a spouse's personal efforts increase the profits or value of the business.
When a spouse's personal efforts increase the value of his or her separate property business, 'it becomes necessary to quantify the contributions of the separate capital and community effort to the increase,' because the 'community is entitled to the increase in profits attributable to [the] community endeavor.'" (id. at p. 1472.) In re Marriage of Brandes (2015) 239 Cal.App.4th 1461, 192 Cal.Rptr.3d 1.
Therefore, even if a spouse starts a business before marriage, the community may be entitled to the increase in profits caused by efforts by a spouse during the marriage (because efforts of a spouse during marriage are community efforts).
If you own a business or your spouse owns a business, California State Bar Certified Family Law Expert Marcus Morales has extensive experience in business valuation, forensic accounting and apportionment issues making both separate and community property claims. Please contact Morales Law for further information or to schedule a consultation.