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Controlling a Business During a California Divorce

Do I Have to Let My Spouse Share Control Over My Business During Our Divorce?

In California, the general rule is that both spouses have equal rights to manage and control community property as if it were their own.  However, if one spouse is the primary operator of a business and the other spouse is not actively involved, the operating spouse will retain responsibility for running the business during the divorce in most situations.  

This responsibility does not go unchecked.  The operating spouse must give prior written notice to the other spouse before selling, leasing, or borrowing against the business' property.  In addition, the law requires actual consent from the non-operating spouse before the business is allowed to give away community property or sell it below market value.

What If the Business is Only Partially Community Property?

California law says that you have a special responsibility to manage the property in a way that does not prevent your spouse from getting the benefit of it.  Therefore, even if your business is only partially community property, you still have a duty to protect your spouse's interest in the business and to tell your spouse about assets, liabilities and transactions that affect his or her interest.

What if Federal Rules Prevent Me from Telling my Spouse About the Business?

California generally requires that you tell your spouse about all of your assets and liabilities, both separate and community - but sometimes, such disclosures are prohibited by Federal Law.  If that happens you must at least report that you have information that you are not permitted to disclose.

Should I Contact a Family Attorney for My California Divorce?

Divorce proceedings can be very complicated.  An experienced family law attorney can help you determine how a California court will divide your property.  A family lawyer can also represent you in court if a dispute arises.

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