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Divorcing With A Business: What You Need To Know

When people think of divorce, they usually think of it in terms of dividing assets and bank accounts, figuring out custody schedules and selling the home. However, when a couple owns a business together, a whole new set of issues come into play that can make what is already a difficult process even more trying. Arkansas is an equitable distribution state, which requires that property be divided in a fair fashion unless other arrangements have been made. However, unlike a bank account, where you can just divvy up the the amount, dividing up a business is a complicated process that requires you to have an expert attorney to assist in determining answers to the following questions, which will help determine your individual liability.

Who Does The Business Belong To?

First, you will need to determine if the business is considered separate or marital property. If the business was acquired during the marriage using joint funds, it will most likely considered joint property. However, this is not as simple as comparing a marriage certificate with a date of business acquisition. One must also look at the financial and labor contributions contributed to the business as well. For example, if the spouse had the business before marriage but used marital funds to overhaul the business, is it now joint property? These are the grey areas that often are the cause of disagreements between spouses. In order to make sure your interests are protected you should have an experienced lawyer to assist.

How Much Is The Business Worth?

In order to determine exactly how much the business is worth, you should hire an attorney with significant asset valuation experience. The two most common approaches used are the book value and the earnings approach. The book value derives the business value from the liabilities and debts of the business, and the earnings approach uses current income and future income projections to place a value on what an outside investor might pay for the business. All businesses are different, and much of the valuation process can be subjective. That is why it is imperative that you hire a professional with a good reputation and years of experience. By hiring a professional, the determined value will more likely be accepted by a judge in the divorce proceedings.


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