If there’s a business involved in your marriage, a divorce can put that asset and your financial future at risk. Arkansas law outlines specific rules for dividing business interests during a separation. Knowing if your business is considered marital property and how it might be divided can help you plan for the financial outcome of your divorce.
Is your business marital property under Arkansas law?
Start by determining whether the business counts as established during marriage or before marriage. In Arkansas, marital property generally encompasses the majority of assets that your spouse has acquired while being married. If you started the company after marriage, the court would treat it as marital property.
Even if you started the business before the marriage, the court may still divide it. The court may treat a business as shared assets if both took part in its growth. Contributions may include working in the business, using conjugal funds to support it, or applying business income to family expenses. To assess these factors, the court reviews tax returns, financial records, and ownership documents.
How equitable distribution affects business division
Arkansas follows equitable distribution, meaning the court divides marital property fairly, not equally. If the court finds that the business is marital property, it orders a valuation from a financial expert.
After the valuation, the court uses one of the following options:
- Buyout: You or your spouse pays the other to take over the business
- Co-ownership: Both of you continue operating the business together, although this is uncommon
- Sale and split: The court orders the sale of the business and divides the proceeds between you and your spouse
The court also reviews prenuptial agreements, internal documents and ownership terms that could affect the division process.
How to protect your business during divorce
You can take steps now to protect your business. Keep clear financial records and separate your personal and business finances. Use ownership agreements that outline each party’s role and responsibilities. If you are already going through a divorce, hire a lawyer who understands business valuation and division. Your attorney can help gather the right documents, arrange a valuation and advocate for a fair result.
Prepare for the business division process
Dividing a family business during divorce often involves complex financial and legal questions. Understanding how the process works can help you protect your interests and make sound decisions. If you’re unsure how the law applies to your situation, consulting with a divorce attorney may help you manage the details and plan your next steps with confidence.