Is it okay to start a business while the divorce is on process? 21 Answers as of February 08, 2012

This is a complicated issue. If it can be proven that any money used to start this business. As of the official date of separation, then his earnings become his separate property (except it is available to be ordered to pay child or spousal support based on his earnings until there is no one eligible to receive support. Secondly, if there is ANY community property used to begin this business, usually something earned during the marriage, but paid to him after the date of separation. This is considered co-mingling and sometimes makes the rest of any separate property co-mingled can be considered community property. Then the next step is whether or not every doll ar can be traced, usually by hiring a very high priced CPA who specializes in tracing. The method of tracing has many loopholes, too many to itemize here. An owner of a once well known Calculator Company in San Francisco, deposited a community property check into that company's bank account and wrote a business check for the same amount to pay for something else he bought. The community property money was in his separate property account for 24 hours. The Court determined that this gave her a community interest in his clearly prior to this transaction his separate property! Also, the business is incorporated so that you are classified as employees and receive regular paychecks, and traditionally, get bonuses, some courts take the position that she may have done something to help him prepare to open the business (i.e. entertained potential investors, helped him find a good location, turned over her last paycheck to him to pay for plans, anything leading up to him starting the business. Of course he could try and get her to sign a document disclaiming any interest. If he is buying land to put his business on, it would require that she sign a quitclaim deed to him, the title company would require that. As a partner, if he got behind on his support payments, she could obtain an assignment on the partnership, if a corporation, on his paycheck, or if he has a retirement plan which he switches over to the corporation, she could be entitled to a portion of that. There are a myriad of ifs, which are not covered just by family law. If he is getting a divorce, I hope he has a good attorney who is savvy enough to cover all the bases. Unfortunately, all Family Law Judges are not cognizant of the ins and outs of business laws and not seasoned enough to have had trials with these kinds of facts. You appear to be asking this Question on his behalf. Remember if you go into business with him with all of these circumstances, you may be brought into the middle of their dispute and it might topple the business. I don't have enough information to try and give any legal advice. Such as what is the length of the marriage, where does he live, where does he want to open the business, what kind of business is it, what separate property does she own so there could be a trade-off, do they have children, is she employed, is she vindictive, who commenced the dissolution. What is their net worth? Has he over the years discussed with her his ideas to open his own business? Based upon the questions and the information you gave me there is no way I can give a definitive answer. If he doesn't have an Attorney, he had better get one or maybe two and consult with a CPA to see if he has a clean trace of his separate property funds. If you are married, your spouse would have an interest if you received earnings from the business. These are all things you should think about. I don't give advice without all of the information.

The simple answer to the question is no. If the business was stated after the date of separation it is his separate business as long as he is not buying the business with assets from the marriage. If the money to start the new business is coming from another source she will not have an interest in the business.

I'm sure his lawyer has told him the potential danger, and you should have your own lawyer, who also will have told you the danger. It's a possible problem for both of you. Neither of you should attempt it without legal help (and it would be safer to wait).

Marital property is defined as any property, however titled, acquired by 1 or both parties during a marriage, which means until the divorce, not the separation. However, property acquired before the marriage, by inheritance or gift from a third party, excluded by valid agreement or directly traceable to any of these sources is not marital property. Therefore, the business interest that your friend "acquires" during his marriage is subject to equitable distribution in a divorce proceeding, but your interest is not. Likewise, a court can not dissolve that business, but it is something that a Judge would consider in that divorce proceeding. Whether it's "okay" for you to join his venture is something that you should discuss with a lawyer familiar with the divorce process.

You should be ok. The community stops at the date of separation so the business would be separate property.

If they are already separated, or if the divorce has already begun, the products of the husband's energies are his separate property, i.e., there is essentially little or no risk that his wife will have an interest in the business.

That's something that should be discussed in detail with your attorney. While it would not be marital property if after commencement of the action, one has to be careful not to violate the Standing Orders.

You should wait until the divorce is final. In Maryland any property that is accrued during the marriage, including the separation period, is considered marital property subject to equitable division.

It is possible. My recommendation is that he should not start any new business, whether by himself or with anyone else, until the divorce is finalized.

Any asset acquired during the marriage and before the valuation date in a divorce can be valued and divided as part of a divorce. As a result, it can be dangerous to start a new business before a divorce has been concluded and certainly more dangerous if it occurs before the divorce is commenced. The key is knowing when your particular state values assets. In Minnesota, that occurs at the first settlement conference date.

You can start a business but be sure you don't use any community property or money because then your spouse could end up owning part of your new business.