Property - Business

Question:

Does a wife have rights in a business set up by her husband after they married ?

Answer:

Yes, even a business solely registered in the husband’s name and run only by him is joint property provided it was established during the marriage.

Question:

Does a wife have rights in business property owed by the husband before the marriage ?

Answer:

In general a wife will have rights in her husband’s business property acquired during the marriage, but not before. However, in exceptional circumstances , in long-established, harmonious marriages the wife may sometimes succeed in proving that the marital partnership in their property extends to business property owned by her husband prior to marriage. So the Supreme Court held in the nineties in a case involving a couple who had been happily married for nearly 40 years, and where the wife had contributed to the marital partnership by raising a family and looking after the home, and occasionally working outside it.

Question :

My husband and I own a family company in which we have equal shares. I am about to file my husband for a division of our property at the family court.

Should I sue the company as well as my husband ?

Answer:

Yes. The addition of the company as a defendant is justified in this situation and even likely to make proceedings more efficient, it was held at a family court in 2001.

Question :

When my husband and I were in marital difficulties we made a property relations agreement in which we agreed to divide the family business equally between us, amongst other things. We never divorced but the division of our marital property was completed according to the agreement which we authorised in court. We stayed together and I continued to helped him with the business during which time it grew considerably. Our relationship is rocky once again. Am I entitled to a share of the business in this growth period ?

Answer:

Much depends on the particular wording of the property relations agreement between the couple. There may have been some reference to the sides possible future claims against one another. In particular there may be reference to the possibility of the wife’s future relations with the company and rights or claims against it which would be relevant. Failing that there may be reference to some general principles in the Property Relations Act of 1973 which are applicable. No clear answer can be given without all the circumstances being known. It could be argued conversely – that the agreement was executed and a totally new situation exists whereby the wife is free to claim she has rights in the business growth since the execution of the agreement.

In a case before the Tel Aviv Family Court in May 2002 a wife claimed a share of the husband’s business during its growth period after the division of the couple’s marital property according to an agreement between them had been carried out. She argued that the property relations agreement, which received court authorisation, related only to the specific items of property existing and mentioned at the time the agreement was signed. Having examined all the evidence the court held that the wife had received the ‘handshake’ agreed upon for ‘keeping away from the business’ according to the agreement and that she had no right to its shares.

Question:

What kind of evidence is required for a husband to prove that his wife is jointly responsible for a personal guarantee he took out for his business ?

Answer:

Her signature as a guarantor ! A wife’s knowledge and consent is required for her to be mutually responsible for a debt arising out of her husband acting as a personal guarantor for loans taken out for his business. This point was emphasised in a case before the Tel Aviv Family Court in December 2002 where the couple had been married for over 30 years and the husband asked the court to hold his wife responsible for debts arising from a series of loans he had taken out to help the company in which he had been given shares … but was unsuccessful.

Case:

Which court will deal with a financial plea filed by a company owned by a wife but managed by her husband, against him and another company he owns and runs, if legal proceedings exist between the couple at the family court ?

Answer:

According to a recent controversial decision of Kfar Saba Magistrates' Court, the local District Court would have jurisdiction, because the grounds for the plea are based on the law relating to companies. It held that the family court would not have jurisdiction as a limited company did not fit in with the definition of "a person" or "family member" under the Family Courts' Act of 1995.

However, this ruling – which is not binding – contradicts with Supreme Court precedent which has held that in such a situation the family court would have jurisdiction as there is a connection between the civil plea and the family dispute.