If I use inherited money to start a business then get a divorce later, will my partner receive half of the business assets?

Asked on October 14, 2011 under Family Law, California


FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Good question. If you used inherited money to begin a busienss, the money you received is legally your own separate property belonging to you under California law.

However, if you then use this inherited money (which is separate property) to start a business and this business is the primary source of income for you and your spouse and you run this business yourself putting in much time and effort into it, under the case law in California this business now has a partial community ownership even though the "seed money" was separate property for its beginning.

The law in this state is that if their is a dissolution, the spouse who did not place his or her separate property into the start of the business will end up with a community property ownership interest in it, albeit not a fifty-fifty ownership interest because of the initial use of separate property funds.


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