Scottsdale Attorneys Protect Your Business During Divorce

Determined Arizona lawyers adopt strategies for divorce-proofing businesses

At Clark & Schloss Family Law, P.C., our attorneys advise on measures that can be effective in protecting an Arizona business during divorce. Business ownership is an asset that may factor into division of property during divorce and it presents difficult issues relating to valuation and control. If you are a business owner, you need a dedicated divorce attorney in Scottsdale, AZ to assess your needs and to devise a strategy for achieving the best possible outcome. We assist clients in Maricopa County and the surrounding areas.

What happens to a business in Arizona divorce

Arizona is a community property state, which means that any asset or debt accrued by either spouse during a marriage must be divided as equally as possible between the spouses during divorce. A business established by one or both spouses during the marriage is community property. Furthermore, even if a business is established before marriage, any income that the owner spouse receives during the marriage is a marital asset, as is any increase in the business value.

How are business assets divided in divorce?

Business assets that are classified as marital property are divided between the spouses in a divorce. Arizona law requires a fair division of marital property but not a 50-50 split of each specific asset. You may be able to hold onto all of your business by sacrificing other assets, such as your share of the marital home. Or you may be able to buy out your spouse’s share of the business over a period of time.

A settlement agreement between you and your spouse can state what will happen with your business in the divorce, allowing you to limit or avoid litigation.

How is a business valued in divorce?

Obtaining an accurate valuation for your business is essential to achieving a fair distribution in court or to negotiating a settlement agreement. This is true whether you own or co-own a small business or you are an entrepreneur engaged in a high net worth divorce. An inaccurate valuation could result in your making unfair property concessions or support payments.

A business valuation may be based on one of the following:

  • Assets — the sum of current assets and liabilities
  • Earnings value — a projection of future earnings
  • Market value — prices for recent sales of comparative businesses

The valuation method that is best for your business depends on multiple factors. Our attorneys will review financial records, market projections and other relevant data to test different business valuation methods and help you choose the optimal one for your situation.

Ways to protect a business before divorce

Our seasoned divorce attorneys in Scottsdale, AZ guide business owners through the protective measures they can take to secure legal ownership of a business before or during marriage. A prenuptial agreement or postnuptial agreement can clearly designate your business — and its profits and appreciation — as your individually owned property rather than as marital property.

Even without a prenup or postnup, there are protective steps you can take. While operating your company, keep business and marital finances separate. It is wise to pay yourself a competitive salary. If you keep money in your business instead of adding income to your marital estate, your spouse could claim that you did not make a fair financial contribution to the marriage.

If your spouse plays a role in the business — with or without equity ownership — you can establish a buy-sell agreement stating each spouse’s rights and responsibilities in regard to the company, as well as how each will be compensated in the event of a divorce.

Contact knowledgeable Scottsdale lawyers to help protect your business from divorce

The attorneys at Clark & Schloss Family Law, P.C. in Scottsdale, Arizona work to protect business assets during divorce. To schedule a consultation with our firm, call 602 789 3497 or contact us online.