Read This If You’re A Business Owner In Arizona Considering Divorce

The decision to end your marriage through divorce is never an easy one, and this is only more true if you own and operate your own business. Whether you started your business before your marriage or put in significant efforts during your marriage, your spouse could be entitled to a share that takes your control away from your own creation. Just like your home, vehicles, retirement savings, and other assets you have acquired during your marriage, your business could be at risk of property division if you file for divorce in Arizona. That doesn’t mean that you need to stay in an unhappy marriage to protect your business. Read on to learn more about the strategies you can employ to safeguard your business and its assets in a community property state. If you’re seeking a free consultation with an experienced Arizona family law lawyer at a firm that offers competitive pricing packages, call 480-263-1699.

Arizona is one of the nine states that practices community property for property division in divorce rather than equitable division. In community property states, all assets and debts acquired during the marriage are on the table during divorce. Per A.R.S. § 25-211, property acquired by gift or inheritance during the marriage is exempt as separate property. So is property acquired after the service of a petition for divorce, legal separation, or annulment.

Because a business can be considered an asset subject to property division in divorce, issues can arise if there aren’t other significant assets to split with your spouse. If you rent and each have your own vehicle, it may be considered unfair to leave the marriage with your business entirely intact. But if you own a home, have savings accounts, or can compensate your spouse through your 401(k), you can cede some of these assets so that you can keep 100% of your business ownership. You maintain control over how your asset division is finalized as long as you can negotiate an agreement out of court, rather than bringing the matter before the judge. If property division proceeds to trial, it will be up to the judge to determine what happens to your business and the rest of your marital assets.

Considering divorce as a business owner in Phoenix or Tucson, Arizona? You will see the best outcomes if you plan your divorce filing early and carefully. Our Arizona family law lawyers can help you devise a reasonable negotiation plan to achieve a consent decree and keep your assets out of court. Start the process today with your free consultation by phone at 480-263-1699.

There are several strategies that business owners can use to ensure that they will not lose their company if they ever get divorced. Some of them must be planned before the wedding or even at the company’s inception to be properly utilized. All of them must be used before a petition for divorce is filed to be effective. You can find just a few of them below- to discuss additional strategies to use given your personal circumstances, schedule your free consultation with our firm today at 480-263-1699.

• Have your fiancé sign a pre-nuptial agreement: While asking for a prenup might put your relationship at risk, foregoing one will put your business at risk instead. You can use this agreement to indicate that your business is not to be subject to property division in case of divorce. Certain precautions must be followed for a pre-nuptial agreement to be considered enforceable, which vary by state. You should always consult with a family law attorney before asking your fiancé to sign a pre-nuptial agreement.
• Have your spouse sign a post-nuptial agreement: If you’re already married, it’s too late to protect your business with a prenup. But a post-nuptial agreement can have the same effect, if your spouse is willing to sign one. Like a prenup, you should consult with a family law lawyer in your state before proposing a post-nuptial agreement.
• Keep accurate and detailed records: If you have concerns about your business potentially being split in divorce, careful recordkeeping is a way to be proactive about protecting it. If your spouse works at your company, you can pay them a market rate salary to avoid claims that your implied agreement was for your spouse to be compensated through an ownership share. It may be simpler to keep your spouse out of the business in any capacity.
• Establish your business under sole ownership: You can use different legal documents to indicate your company’s ownership and give it a certain business status. When your business is an LLC or corporation, it allows you to separate business assets from personal assets. Here, it’s crucial that you maintain that separation between business and personal expenses, or it could come back to bite you during divorce. Don’t use marital funds on the business, and don’t spend business funds on marital assets and personal expenses. You can also consider placing your business in a trust to emphasize the separate property nature of your business.
• Make sure to pay yourself a fair salary: Even if your business is exempt from property division in a potential divorce, you can’t work full time, draw no salary, and contribute nothing to the marriage. If someone else working a similar job would be paid thousands of dollars, receive medical and retirement benefits, etc., it wouldn’t be fair for you to put everything back into the business, rely on your spouse for these financial burdens, and then split everything 50/50 if you get divorced. Your spouse may argue that they are entitled to a larger share of the marital estate under these circumstances. You can avoid this potential dispute by paying yourself a market-rate salary for the services you provide to your own company.

All too often, litigants in Arizona family law matters choose to represent themselves because they believe it will help them save money. Unfortunately, this can backfire by costing them far more in the long run, and this is especially true for those who make a living by running their own businesses. While it might not make financial sense going forward to destroy a business in divorce, your spouse might not be thinking far enough ahead into how that might impact your ability to pay child or spousal support. All legal matters are stressful experiences, and family law disputes have an extra layer of tension that can make it harder to think and articulate yourself clearly. Having an experienced family law attorney on your side can make all the difference when divorcing in a community property state like Arizona. Whether you need a lawyer who can negotiate a favorable agreement on your behalf, or is prepared to take your case all the way to trial, our firm offers unbeatable legal representation with competitive rates in Phoenix and Tucson. Get started today with your free consultation by phone at 480-263-1699.