How is a Business Divided in an Arizona Divorce?


If you’re getting a divorce, you and your spouse must decide how to divide up your debts and property, or request that the court do it for you. Arizona is a community property state, meaning that any debts or assets acquired during your marriage belong to each spouse (approximately) equally. While some couples can come to an agreement on how to do this, others can’t and must seek a judge or arbitrator’s decision.

As a business owner, you might be concerned about what will happen to your company in the event of a divorce. If you started your business during your marriage (even if the other spouse wasn’t involved in the process), it will belong to each of you in the event of a divorce. We’ll cover how splitting from your spouse will affect your business and what to do if you need legal assistance.

How does Divorce Impact Your Business in Arizona?

  • Some divorces settle amicably within a few months or less, while others are more complicated and expensive
  • You have several options for dividing a business in divorce, including a 50/50 split and one spouse buying out the other
  • If you decide to dissolve your business, the process will likely take longer, and cost more than it would to keep it intact
  • In some cases, hiring a family law attorney is of the utmost importance, especially when you can’t agree with your spouse

If you and your spouse are partners/owners in the business, a divorce can impact it in several ways. You may retain your ownership and continue representing your own interests as a business partner after a divorce. In some cases, one spouse may buy out the other or one spouse will give up their shares for compensation in another form (such as a community asset).

Getting the business handed over to one spouse and giving the other one compensation is one of the simplest ways to settle this matter. If the divorce is on less amicable terms or has complicating factors (like child custody), you should expect a lengthier and more expensive process.

What Factors Determine Division of a Business?

If both you and your spouse own part of the company, a 50/50 division may work best for you. Some factors the court will examine to make their decision include interests of other partners in the business, asset ownership before marriage, and how much each spouse contributed to the business before marriage.

To divide a business in a divorce, the court will look at relevant financial information such as contracts, invoices, certificates, balance sheets, profit and loss statements, and more. Keep in mind that division of assets may be more complicated for certain types of companies, such as a service-based business.

Dissolving Your Business in a Divorce

In some cases, a community property business won’t survive a divorce and breaking it up will work better. If you end up going with this option, the process will be complex since a fair share must be determined for both you and your spouse. This may require professional valuators and other experts to calculate your assets and value the business once it’s been dissolved.

Remember that a business’s break-up value will be less than what your assets are worth due to financial complications and debt considerations, so you might receive less than you expect. If you end up breaking up the business, you must pay off affected parties within a specified order of priority. If the business has any debt, creditors will receive their payments first, followed by investors and, lastly, company partners.

How Working With an Attorney Can Help

While you can get divorced yourself without an attorney, it may save you time and hassle to hire one and ensure you get a fair separation agreement. In some circumstances, legal counsel will be especially beneficial, such as a divorce with a large amount of marital property or a complicated business tied up into it.

If you have children with your spouse, involving a lawyer is even more important for reaching a favorable conclusion. Visitation and child custody matters can be emotional and complex, so having an objective third-party is helpful for reaching a fair agreement.

Frequently Asked Questions on Divorce in Arizona

Here are some commonly asked questions regarding divorcing in Arizona:

Q: How do I start divorce proceedings?

A: To begin a divorce, one spouse must go through the clerk of the Superior Court to file a Petition for Dissolution of Marriage. You will pay the filing fee, and your spouse will receive a summons and copy of the petition. They must file their response within 20 days from being served these forms. If the service is in another state, they’ll have 30 days. The Dissolution of Marriage petition and your spouse’s response will begin the family court proceedings.

Q: How long do I need to be an Arizona resident before filing for a divorce?

A: At the time you begin the proceedings, either you or your spouse must have resided or been domiciled for 90 days or more in Arizona. This also applies if one spouse is in the military and stationed in the state.

Q: How long does it take to get a divorce?

A: The length of time a divorce will take depends on several factors, including whether it’s an uncontested or contested divorce. An uncontested (also known as “no-contest”) divorce can settle in a month or two. Contested cases, on the other hand, can take up to a year or more. If you can’t agree about the value of a business, or there’s a dispute over custody issues or finances, you may need evaluations from experts before the divorce can be finalized.

What to Do if You Need Help

If your divorce case goes to mediation or court for any reason, you should speak with a family law attorney as soon as possible. Negotiating with your spouse and appearing in court can be difficult and an attorney can help increase the chances that your best interests are supported.

Call the Family Law Team at (480) 467-4348 to discuss your case today.

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