When you decide to divorce, you have a lot of concerns about your finances. You know you will have to split assets with your spouse, but you are unsure how that will play out. If you own a business, you might be even more worried. Will you split assets from your business with your spouse too? How will your divorce impact your business overall?
Divorce’s impact on a business
Divorce may impact your business in several ways, most notably its finances. In divorce, couples split their marital assets – all assets and income they acquired while married. This includes business assets unless:
- You have a prenuptial agreement protecting those assets.
- You put your business in a trust.
Arkansas practices equitable property division. So, you will split the assets your business gained during your marriage in a fair, equitable manner with your spouse in divorce. This doesn’t necessarily mean you will give half your business assets to your spouse. If your spouse was minimally involved in your helping run your business, it may be less than half.
However, a few factors will play a role in the percentage of business assets your spouse will receive, including:
- If you paid yourself a fair salary (if you didn’t, your spouse could claim your marital assets suffered as a result)
- If you didn’t separate your business finances well from your personal assets (for example, you used collateral from your home’s worth to invest in your business)
- How long you were married
- If your spouse was very involved in launching or running the business too
When you split business assets with your spouse, you may need to:
- offer them other assets to buy out their share of the business’ assets
- arrange to pay them for their share of the business assets over time
- have another business partner or partners buy out your spouse’s share of the business’ assets
- sell your business and split the assets with your spouse
All of these options can be complicated and can take a toll on your emotions. You likely will have a difficult time focusing on your businesses day-to-day operations amid your divorce. If your spouse is involved in running your business, you may have to decide if one of you needs to leave their role to truly move forward. Your business could suffer from these challenges.
Getting help with asset division in divorce
If you are concerned about how your divorce will impact your business, you need to consult an experienced family law attorney. You need to work with your attorney on a strategy to preserve your business assets as best as you can. If you haven’t started the divorce process, you may need to seek a postnuptial agreement to better protect your business.
Unfortunately, many business owners suffer a big financial setback in divorce. You want to do all you can to minimize how divorce will impact your business, so hopefully you can maintain its success over the long run.