Can a partnership in a family business be considered community property?

UPDATED: Oct 14, 2011

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Can a partnership in a family business be considered community property?

4 years ago my brother made me a 45% partner in his business. No money was ever exchanged for this. Basically it was a gift. Now my wife and I are thinking of divorcing. My wife does not and has not worked for this business. There are very little assets and no other employees other than ourselves. We are incorporated and it is just in our name. The way I read the law is, “A spouse’s separate property, which is property acquired before the marriage and property acquired by gift or inheritance, is awarded to that spouse”. Since he gifted me a portion of the business, wouldn’t this qualify?

Asked on October 14, 2011 under Family Law, Nevada


FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

Yes, a partnership interest in a business can be considered and actually be community property assuming the conditions for a community property claim exist and the state where the business operates recognizes community property law.

If the interest received was a gift for the business, it is technically separate property. However, if you put community time, effort and money into this separate property, then the business can become a community asset especially if this business generates income for the community estate (you and your spouse).

If you wife is considering divorcing you, I recommend that you consult with a family law attorney to protect your interests and assist you in getting your assets in order. Good luck.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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