Divorce is a challenging situation for businesses that rely on partners. So, what happens to business interests and partnerships when an Arkansas couple splits? This article examines the role of Arkansas divorce laws in dividing business interests and partnerships.
Equitable Distribution of Business Assets
Arkansas law follows the concept of equitable distribution of assets. It means that the court will divide the property between the spouses in a fair and equitable manner, but not necessarily in a 50/50 split. Thus, business assets acquired during the marriage are considered marital property, and their value is subject to division.
Definition of Marital Property
In Arkansas, marital property includes all assets and debts acquired during the marriage, regardless of whose name is on the title. It also includes income and benefits obtained during the marriage, but not inheritances or gifts received by one spouse. Therefore, if one partner owns a business before the marriage, it is considered separate property and not subject to division.
Valuing the Business
Valuing a business can be complicated because it requires evaluating the value of the company’s assets and liabilities. Generally, a forensic accountant or a business valuation expert will be called upon to value the business. Both spouses have the right to obtain their own appraisals but must pay for them independently.
Determining the Business Ownership
Arkansas courts attempt to identify and value property interest. In the case of business ownership, this means determining the value of each spouse’s interests in a limited liability company or a partnership. Joint ownership of a business is a common situation in which multiple parties have an interest. If both spouses have an equal stake in the business, the court may opt for dissolution, and the business assets will be liquidated and divided.
Buyout Option
If the business has only one owner, Arkansas courts utilize a buyout option to divide the business property equitably between the spouses. In this scenario, one spouse may retain the business by buying the other spouse’s ownership interest. Usually, an outside party is used to determine the value of the business.
Dividing Business Assets on a Temporary Order
When a divorce is pending, the spouse who owns the business may request a temporary order that allows them to keep control of the company’s assets during the divorce proceedings. The temporary order can be requested by either spouse and protects all marital assets.
Conclusion
Divorce in Arkansas can be challenging for a business that relies on partnerships. The division of business interests and partnerships depends on state law, and the court is responsible for ensuring the equitable distribution of assets. If you are going through a divorce in Arkansas and are unsure how business assets and partnerships will be handled, contact an experienced divorce attorney for guidance.