The end of a marriage may be one of the most stressful and daunting life changes one may ever face. Along with potentially being an emotional rollercoaster, there are numerous aspects involved in the process, such as property division, that can have a significant impact on your financial future.
Perhaps you own a business, and you may wonder how the outcome of your divorce will affect it. The answer to that question can be complex and may depend on the variables present and decisions made before and during the process.
Safeguarding the longevity of a business
Chances are you probably wish to secure the future of your enterprise when facing divorce, but perhaps you married with the intent of staying with your spouse throughout life, thus forgoing the notion of a prenuptial agreement. Without an agreement in place that dictates the division of your business assets, you may have to consider additional factors, such as:
- Type of property: If you owned the business before marriage, it may be separate property, which is not subject to division. However, separate property can lose its identity if mingled with marital assets in any way. If your business increases in value during marriage, that increase may also become marital property.
- Competitive salary: If you reinvest most of your profits back into the business, your spouse may claim that he or she suffered as a result, and paying yourself a competitive salary could help avoid a potential disaster.
- Spousal involvement: If your spouse is involved in the business in any way, even a small contribution to its success could place him or her in a position of entitlement.
- Negotiation: Perhaps your spouse is entitled to a portion of the business. You might consider buying his or her interests in the company or even relinquishing ownership of other marital assets in exchange.
If you have a business partner, there may also be an existing agreement that prohibits transfer of ownership without partner approval. While this may not release you from monetary obligations, another owner could choose to buyout your spouse’s business interests, potentially allowing you to retain partial ownership.
Guidance concerning complex assets
In community property states, such as Arizona, marital assets are divided equally between both spouses during divorce proceedings. However, when a business is involved, the division of assets can be an exceedingly complex process. When seeking to safeguard the future of your business, you might find it beneficial to retain the services of someone with extensive knowledge concerning complex assets. An attorney can inform you of all available options and their potential outcomes and assist you in pursuing the most favorable outcome possible concerning the future of your enterprise.