If you are an Arkansas resident with coupled creativity and resiliency that have enabled you to establish a profitable business, you undoubtedly use those same traits to ensure that your enterprise will remain viable over the long term.
And that means this: prior to, during and, in the event of a divorce, following marriage.
In our May 23 blog post, we noted that there “are many things an individual can do — and also avoid doing — to better ensure that a business will live on and be adequately protected in the event of marital dissolution.”
In terms of a business already existing at marriage, an enterprise owner might reasonably seek to execute a prenuptial agreement, buy-sell contract and/or other documents that denote separate property and delineate how it will be handled in the event of a marital dissolution.
There is a caveat to consider with that, though, as duly noted in a recent business article discussing the legal treatment of a business prior to and following a divorce.
And that is this: a court asked to enforce written understandings between divorcing spouses will closely scrutinize them from every relevant aspect, considering things like the following
- Business property that might reasonably be regarded as being commingled with marital assets, which will render it subject to equitable distribution between divorcing parties; and
- Any operational, financial or other support provided to the business by the partner who did not create it
As the above-cited article points out, there are myriad ways a divorcing spouse might retain a business while fully complying with court directives concerning asset distribution.
One strategy would be to part with other marital assets — e.g., investment accounts and real property holdings — that will collectively satisfy the other spouse’s distribution rights.
Alternatively, what is deemed owed to a soon-to-be ex from a business can be paid out in cash over time or from a loan.
In some instances, of course, there is no middle ground that will allow one party to satisfy asset distribution requirements while fully retaining an untouched business. It is simply the case sometimes that a commercial enterprise must be sold to comply with a court order.
Business affairs in a divorce can range from the simple to the highly complex. Divorcing Arkansas residents can turn for guidance and proven legal representation to a seasoned divorce attorney with a deep well of experience handling property-division matters.