Quick Navigation:
- Types of Business Assets in a Divorce
- Factors that Help the Court Decide on the Value of Your Business Assets in a Divorce
- Whether you have to Sell the Business in a Divorce
- How Divorce Affects Business Partners
- Buy-sell Agreements in Protecting a Business
- The Impact of Prenuptial and Postnuptial Agreements
When a marriage dissolves, dividing business assets can be particularly complex. In Arizona, a community property state, all assets acquired during the marriage are typically split equally, including business interests.
At Colburn Hintze Maletta, our experienced attorneys specialize in handling the intricate details of divorce involving business assets, providing you with the expertise and guidance needed to ensure a fair outcome.
According to the U.S. Census Bureau, approximately 20% of small businesses are owned by married couples, highlighting the importance of understanding these legal aspects for many entrepreneurs.
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How Is A Business Divided In A Divorce?
What Are Some Types of Business Assets in a Divorce?
Business assets can be diverse, including:
- Tangible Assets: These include physical items such as real estate, equipment, inventory, and furniture.
- Intangible Assets: These include intellectual property, patents, trademarks, and business goodwill.
- Financial Assets: Cash, accounts receivable, investments, and other financial instruments.
- Contractual Agreements: Any existing contracts, such as supplier agreements, customer contracts, or leases, are considered assets.
Each type of asset must be appropriately identified and valued to ensure an accurate division in a divorce.
What Factors Help the Court Decide on the Value of Your Business Assets in a Divorce?
Determining the value of a business during a divorce involves several factors:
- Business Valuation Methods: The court may consider different valuation methods such as market value, income approach, or asset-based approach.
- Date of Valuation: The value of the business can fluctuate so that the court will decide on a specific date for valuation, often the date of service or trial.
- Expert Testimony: Financial experts, accountants, and appraisers may be called upon to provide detailed valuations and assessments.
- Goodwill: The court considers personal goodwill (attributable to the owner’s reputation) and enterprise goodwill (attributable to the business itself).
- Liabilities and Debts: The business’s existing liabilities and debts are subtracted from its value to determine its net worth.
In Arizona, the equitable division is guided by the principles outlined in A.R.S. § 25-318, ensuring a fair but not necessarily equal distribution of assets.
Do You Have to Sell the Business in a Divorce?
Selling the business is only sometimes necessary.
Alternatives include:
The decision depends on the business’s specifics and the parties’ preferences, guided by A.R.S. § 25-318.
How Is Divorce Different For Business Partners?
Divorce impacts business partners uniquely, especially when one or more partners are not involved in the marital dispute.
Key considerations include:
- Partnership Agreements: Existing partnership agreements can dictate the course of action in case of a partner’s divorce.
- Valuation and Division: The divorcing partner’s interest in the business must be valued and divided without disrupting the business.
- Buyout Provisions: Partnership agreements often contain buyout provisions that come into play during a divorce.
- Impact on Business Operations: The divorce process should be managed to minimize disruption to business operations.
Addressing these issues proactively can help maintain business stability and protect all partners’ interests.
How Buy-Sell Agreements Can Protect Your Business if Your Partner Gets Divorced
A buy-sell agreement protects a business in case a partner gets divorced.
During a divorce, the issue of handling a shared business can become complicated. If the company started during your marriage, it may be considered marital property, meaning that it will be subject to property division as part of the divorce case.
This is where a buy-sell agreement can come in handy.
By outlining what will happen to the business in the event of a divorce, you can better protect the business’s success and ensure a smooth transition if one of the partners is going through a divorce.
In many cases, the best option is for one spouse to buy out the other’s share of the business. This can minimize the disruption to the company and ensure that both parties can move forward separately. If one spouse is unable or unwilling to buy out the other, it may be necessary to sell the business and divide the proceeds as part of the divorce settlement.
This is why it is crucial to have a buy-sell agreement in place that addresses the following: Implementing a buy-sell agreement can prevent disputes and ensure a smooth transition during personal upheavals.
What Happens if There Was a Prenuptial Agreement or Postnuptial Agreement?
Prenuptial and postnuptial agreements can significantly impact the division of business assets.
When a couple decides to run the business together, it is crucial to consider how marital property and assets will be divided in case of divorce. Any marital asset acquired during the marriage is typically subject to equitable distribution under Arizona family law.
This includes the ownership interest in a business that started during the marriage or is deemed marital property. If one spouse contributed to the company or increased its value, they may be entitled to a share of the business ownership interest during divorce proceedings.
Having a prenuptial or postnuptial agreement in place can shield your business and clearly outline how the business assets will be divided in the case of divorce.
Without such an agreement, the valuation and division of a company during a divorce can become contentious and complicated.
It is essential to consult with a divorce attorney or family law attorney to ensure you receive your fair share of the business and that the company is valued accurately during a divorce.
In cases where both spouses co-own a business or are in a business partnership, determining each party’s portion of the company can be challenging.
A well-drafted agreement can specify how each spouse must handle the business during divorce and what happens to a business share in the event of a divorce.
Under A.R.S. § 25-202, prenuptial and postnuptial agreements are enforceable if they are in writing, signed by both parties and entered into voluntarily.
Contact an CHM Divorce Attorney Today
Dividing a business in a divorce involves complex legal and financial considerations. Understanding that Arizona is a community property state rather than a separate property state can help you protect your interests and ensure a fair division of assets.
By staying informed and seeking professional legal advice, you can navigate the challenges of dividing business assets in a divorce while safeguarding your investments and future.
At Colburn Hintze Maletta, our dedicated attorneys are skilled in navigating the complexities of divorce involving business assets. We provide personalized guidance to help you achieve a fair and equitable resolution.
Contact Colburn Hintze Maletta at 602-825-2500 to schedule a consultation today.
David Maletta is a widely respected criminal defense attorney with over 23 years of experience and has worked on over 1,000 cases and has successfully won over 100 jury trials. David graduated from Northern Arizona University, Magna Cum Laude in 1993 with a degree in Psychology. Shortly thereafter, he earned his Juris Doctor degree from Seton Hall University School of Law in 1998. He has extensive experience in criminal and DUI matters, homicide, sexually-based offenses, domestic violence, white-collar crimes, and various misdemeanor crimes.
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I recently consulted with Darin after my wife filed for divorce. He was referred to me by a friend whom I very much trust. Darin was the antithesis of the first two attorneys I consulted (who were matter-of-fact and had very little empathy about the fact that I was struggling emotionally with what was transpiring). From the first few minutes of speaking with Darin, it was obvious that he was very knowledgeable and skilled with divorce and family matters. While that was most important to me, the thing that made the difference was his calming, logical, and empathetic approach. He took the time to listen and empathize with me. He took the time to understand what I wanted to achieve through this process and laid out my options. After the consultation, I knew he would be my attorney if I had to pull the trigger. I, ultimately, didn’t have to engage Darin’s services due to a reconciliation with my wife. I hope I never have to go through that process again. However, if I do, I know beyond a shadow of a doubt who I will be hiring to represent me…Darin R. Colburn. Darin, thank you for caring and being more than an attorney.
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Both my attorney Judie Rettelle and paralegal Whitney Stricker made a very difficult situation in my life (a divorce with 2 young children involved) a bit easier with first and foremost, their kindness to me and patience with me. I appreciate everything more than they will ever know. They were also extremely knowledgeable on all fronts and extremely prompt and detailed with their communication. I function the same way, so that really helped a lot. Thank you both again for everything. No one wants to have to go through a divorce, but if it happens, you need someone you can trust and count on – CHM and Judie/Whitney specifically – are those people.
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David has been extremely professional compassionate and knowledgeable. He exhibited immediate and genuine concern for securing the most favorable outcome I could get. I couldn’t ask for more. Thank you
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Mr. Dave Maletta represented me in a legal matter that I had no idea where to start at. I contacted his office and they were very polite and made me feel comfortable from start to finish. Mr. Maletta was very thorough and professional! He returned my calls when I would leave a a message. He made me feel like I was his number 1 priority. Thank you again to the CHM office for everything you all did for me! I will definitely be recommending others to this place.
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I had an exceptional experience with this Family Law Attorney. They handled my child support litigation, contested divorce, and custody & visitation rights with utmost professionalism and expertise. Their guidance through the divorce litigation process was invaluable, and they were incredibly thorough with the modification of court orders. They also assisted me with paternity establishment and drafting a prenuptial agreement, which gave me great peace of mind. The attorney’s approach to property division and spousal support & alimony litigation was fair and meticulous. They were also very supportive during the restraining order litigation, ensuring my safety and well-being. I highly recommend their services to anyone in need of a reliable and compassionate family law attorney.
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After learning my spouse was filing for divorce, I found CHM Law on both Google and Yelp. After my initial consultation, I was convinced they were the best firm for the job. My team of lawyer Judie and paralegal Whitney were incredible, to say the least. They ensured an incredibly smooth process during a very difficult period and obtained a settlement above and beyond my wildest expectations. If I ever get remarried and divorced again, they will be my first call.
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David Maletta helped My teenage son thru a very tough time. He handled his legal defense with total professionalism and discretion. David got us the best outcome and I am very grateful for all he has done for us. David and his team should be the first to call when ever you are requiring legal help.
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Outstanding Family Law Attorney Office the team provided exceptional service during a difficult time. Their professionalism, empathy, and expertise in family law were evident from start to finish. They were always responsive and offered clear, practical advice that made navigating my case much easier. I highly recommend them for anyone in need of a trustworthy and skilled family law attorney.
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Absolutely outstanding experience with Colburn Hintze Maletta PLLC! Their team exhibited the utmost professionalism and expertise throughout our legal matter. From the initial consultation to the resolution, they demonstrated a deep understanding of the law, provided clear and strategic advice, and were incredibly responsive to all of our concerns. Their dedication and commitment to achieving the best possible outcome truly set them apart. I highly recommend Colburn Hintze Maletta PLLC for anyone seeking top-notch legal representation. Five stars without a doubt!
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I had a free consultation with Timothy Hintze, he’s super compassionate and takes the time to hear you out and answer questions. He’s very honest and based on that consultation I can tell her is quick to think on his feet. Unfortunately right now I can’t change my order or modify but definitely considering him once it’s time to modify my order in the future! Thank you Tim for showing empathy for my situation! I don’t get that a lot from lawyers.
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I had the opportunity to work with Darin during a very troublesome time in my life. As a family attorney, I found him to be very professional, very empathetic, and very responsive to all the issues I faced. I would recommend him to anyone without a second thought. Thank you, Darin!
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Mr. Hintze was exceptionally thorough in explaining the law, our options with our case, what to expect, and how the Court would proceed. His skill in presenting arguments at trial was exceptionally precise and detailed. He did not hesitate to defend and argue when necessary to protect his client, which we feel contributed to our win at trial. We would highly recommend him to any prospective client.
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There is not a single mother out there who is ever prepared for the phone call from the local police department. That phone call can change your life. I got into contact with Jessica Hernandez of Colburn Hintze and Maletta and she was able to take my worries and fears off my shoulders. She worked extremely hard to get the results that my son needed and got him released with probation. She was able to set my mind at ease and she continued to remind me that these actions of my son did not define the person he is. What a gift to have someone defend my child and at the same time not make me feel like I was judged as a bad parent or a failure. Thank you Jessica for taking him on and for never giving up on him. Thank you for being an amazing attorney and for always taking my questions.
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