OMG I'M GETTING A DIVORCE - WHAT'S GOING TO HAPPEN TO MY BUSINESS?
So, you’re getting divorced and you are self-employed in your own professional practice, company, or perhaps a family business. At some point, a panic will set in…
What is going to happen to my business?
Will I have to sell it?
Will I have my Ex as a partner even after the divorce?
Will I lose all that I built?
The first question is when did you establish or acquire (if you bought or acquired an existing business) your business?
If it was during your marriage, then it will be presumed to be community property with each of you having an equal one-half interest in the ownership and value of the business up to your share. However, that does not mean the business is lost or will have to be sold; it simply means that your spouse has an interest in the business that will have to be taken into account by the Court during the division of all community assets.
Prior to marriage:
If you started the business prior to marriage or went to work in a well-established family business, your ownership interest in the business will generally be treated as your sole and separate property. Unfortunately, that mere fact does not end the inquiry as your efforts in this business during the marriage are presumed to be for and on behalf of the marital community and any resulting growth or increased value in your business as result of those efforts can establish an equitable interest for the marital community – meaning your spouse may still have a claim or equitable lien against your business with respect to these community efforts even though they have no claim to ownership. We will discuss “equitable liens” and Arizona law regarding “equitable liens” in more detail in a later blog in this two month series.
Going through a divorce when you or your spouse have your own business can be complex and nerve-racking. Having an attorney who is experienced in dealing with these complicated issues is essential to protecting both the business and your peace of mind. If you would like to work with one of our experienced divorce attorneys, please call OWENS & PERKINS at480.994.8824 to schedule your free 30 minute consultation.