Because community property includes the personal efforts of each spouse, the community property interest in a business owned by one spouse prior to marriage, or otherwise established with separate property during marriage will be determined based upon whether the other spouse has worked in the business. The exact method of assessing the community interest will depend on whether the business has increased in value, and the reasons for the increase in value (passive activity or active participation by a spouse). A business established entirely with community funds will be divided equally between the spouses regardless of the efforts of either spouse.
BACK TO FAMILY LAW TOPICS
Copyright © 1999 Roy A. Barry, all rights reserved.