Distribution of marital assets can be one of the most contentious aspects of divorce. There can be a great deal of personal and financial stake in how things are divided. It is no wonder that things can get so heated as this key issue is addressed. This may be especially true when it comes to the division of a business. Many pour much of their lives into creating and running a successful business. It can not only be a central source of income but also deeply personal. If you are about to go through a divorce, you may be wondering whether your business will be cut down the middle and your spouse will receive half.
Will My Spouse Receive Half My Business in a Divorce?
As an equitable distribution state, Arkansas courts approach division of the marital assets in a way that is meant to be fair, but not necessarily equal. In order to do equity, a number of factors will be considered in the distribution process. For instance, the length of the marriage, the financial contributions of each spouse in the marriage, the non-financial contributions of each spouse in the marriage, and a variety of other relevant factors. In dividing all marital assets, the court will weigh these factors and the totality of the circumstances to try and do equity.
First, however, the property will have to be categorized as separate or marital. If a business was established prior to marriage, it may be viewed as a separate asset, at least in part. The business may be seen as part separate and part marital. This can happen in cases where the business may have been founded prior to marriage but gained in value during the marriage or both spouses made contributions to building and maintaining a successful business.
Considering the fact that so many different factors must be evaluated to do equity and the business may not be considered a totally marital asset or others may hold interest in the business preventing a 50-50 split of the business, it may be the case that the business may not be split down the middle between two divorcing spouses. It may, however, still be subject to division as the court may find both spouses hold an interest in the business.
In order to divide the business, the business must first be valued. There are several different methods employed in business valuation. For instance, the asset approach calculates the business value as the assets minus the liabilities. The market approach, on the other hand, compares the business to similar businesses that have been sold and calculates its value based on that. With the income approach, business records are entered into formulas to project the expected cash flow and profits of the business in order to find the value of the business. In many cases, each spouse will receive a certain percentage of business interests in a divorce. One spouse may choose to sell his or her shares to the other spouse using the value of the business to reach the sale price of his or her shares.
Are you going through a divorce and are worried about your business being split apart? Talk to knowledgeable divorce attorney Bryce Cook about your options. Contact the Law Offices of Bryce Cook today.