Divorce is never something that is expected to happen at the time of marriage, but it is a possible situation that you could find yourself a part of. The divorce process is complicated for everyone involved, but when you or your spouse is the owner of a business, things can get a little trickier.
When you own a business, it becomes one of the most valuable assets under your name. You’ve put countless hours of time, money and energy into it so it can grow and become a success. So of course, in the event of a divorce, wouldn’t you want to make sure that it is protected?
Depending on the circumstances and financial agreements of your marriage, and the guidelines outlined in your alimony agreement, your spouse may possibly be entitled to as much as 50 percent of your business in the event of a divorce.
First, it’s important to note the differences between separate and marital property. Not knowing these differences could result in you inadvertently doing something that may cause your property to land in the hands of your ex-spouse as marital property when it shouldn’t have.
Separate property includes:
- Property that was owned prior to the marriage
- An inheritance received by one spouse solely
- A gift received by one spouse solely from a third party (not from the other spouse)
- The pain and suffering portion of a personal injury judgment
- If separate property is comingled with marital property, it can lose it’s status of being separate property.
- All other property acquired during the marriage is considered marital property, no matter which spouse owns it or which name is on the title.
Marital property includes all assets acquired by either spouse during the marriage, including:
- Pension plans; 401(k)s
- IRAs and other retirement plans
- deferred compensation
- stock options
- restricted stocks and other equity
- country club memberships
- life insurance (especially those with cash values)
- brokerage accounts – mutual funds, stocks, bonds, etc
- bank accounts – checking, savings, CDs, etc
- closely-held businesses; professional practices and licenses
- real estate
- limited partnerships
- cars, boats, etc
- art, antiques
- tax refunds
Arizona is a Community Property State, meaning that both spouses are considered equal owners of all marital property, resulting in a 50-50 split.