What is my husband entitled to in a divorce if I own a businessbut he was never employed or has worked in it?

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What is my husband entitled to in a divorce if I own a businessbut he was never employed or has worked in it?

I’ve been married 13 years. I bought my business 3 years ago and everything is in my name. He filed taxes with me as married. Does he have any right to any portion of my business?

Asked on December 26, 2011 under Family Law, Ohio

Answers:

S.L,. Member, California Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

If you live in a community property state such as CA, community property is property acquired during marriage which includes income during marriage.

Separate property is property acquired before marriage or after the marriage ends.  This also includes income before marriage and income after the marriage ends.

If the source of the funds used to start your business was income during marriage, then the business is community property because the character of the source was community property.  Each spouse has a one half interest in community property and your husband would have a one half interest in the business.

If the source of the funds used to start your business was separate property, then the business is your separate property and your husband has no claim.  For example, if you received an inheritance and used those funds to start your business, the business would be separate property because an inheritance is your separate property even if the inheritance occurred during marriage. 

Another issue to consider is that if the business was started with separate property funds, but was expanded or improved with community property funds, then the value of that expansion or improvement or increased profits of the business would be community property and your husband would have a one half interest in the value of those improvements, expansions, increased profits, etc.  If improvements, expansion, increased profits, etc. were due to separate property funds, then your husband has no claim.

If you don't live in a community property state, then other rules may be applicable.


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