Ex-Crony Capitalism Beware: The Duty to Preserve the Family Business

Small businesses are the engine of the American economy. What if you are a Louisiana wife whose husband has run the family’s small business while you stayed home with the children or had the “day job” that provided financial stability? Can he close the doors, move the furniture and the inventory, raid the corporate account and start up a new company called “See Ya, Inc.”, as soon as he’s sued you for divorce?

The answer depends upon whether the business is community property. If the company was formed during your marriage (and you had noprenuptial agreement), there is a presumption that the business is community property. Spouses in possession of community property when a divorce petition is filed have an obligation to care for that property and preserve it. In this case, your ex will have a duty to preserve the family business.

Imagine that the business was your family home. The person left in the home could not vandalize it, set it on fire, or allow cattle to live in it. The same general principles apply to a community business. Although after filing for divorce your husband could begin a new business that would be his and his alone, he cannot act in a way that damages the success of the community business. You should do your best to monitor the family business if you separate and bring your concerns to your lawyer’s attention at the earliest opportunity.