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When divorce property division includes a business

On Behalf of | Nov 1, 2019 | Divorce

Arizona business owners may face some particular challenges when they decide to divorce. Property division and the financial consequences that accompany the end of a marriage can be difficult for people in any profession, but small business owners may actually lose their companies. When a business is small and closely held, it may reflect a large bulk of the marital assets to be divided. In addition, when both spouses were a key part of the company, there may be some serious challenges to determine the future of the company. As a result, some business owners may decide to sell their companies and move on to handle their obligations during the divorce.

While losing the business may be a negative outcome of a divorce, the process is easier when the enterprise is fairly valued and sold at a profit. In other cases, the difficult circumstances created by the divorce may lead to a bottleneck in business operations, driving down profitability and even viability for the firm. In other cases, the full valuation of the business may itself be a source of conflict, especially if a new product launch or funding cycle involving outside investors is on the horizon.

Partnerships may also create special concerns if one of the partners decides to divorce. The settlement made in that partner’s divorce may affect the future of the entire company. As a result, partnerships may wish to establish buy-sell agreements. These could enact conditions under which other partners would buy out one partner, such as during a divorce, protecting the firm from the divorce.

Financial issues can be some of the longest-lasting consequences of divorce, especially for business owners. A family law attorney may help an entrepreneur negotiate a fair settlement on divorce legal matters, like property division and spousal support.