Starting a business in Arkansas is not an easy feat; it takes lots of sacrifices, time, and effort to see its fruition. Thus, it is crucial to protect your business during the most challenging and vulnerable times of your life, like in a divorce. That said, let us look at how you can protect your business in marriage dissolution.
Divorce in Arkansas
According to Arkansas Family Law, when you start a business under your name while married, that business is subject to division in the event of divorce. The court will fairly divide all assets acquired by both spouses while they were married. Also, in Arkansas, the court can give part of your separate property to the non-titled spouse if he/she has a special need.
Separate property is all items that you acquired before marriage or received as a gift or inheritance. Normally, these assets are not subject to division, but if your spouse contributes to raising the value of this property, the court will consider that input in a divorce.
Protecting your business in a divorce
You can protect your business in a divorce by:
1. Using prenuptial or postnuptial agreements – Asking your spouse to sign a prenuptial or postnuptial agreement may not be the most romantic way for most people to start a marriage, but it is essential when it comes to protecting your finances and assets. You can determine the roles each partner plays in your business and agree on how to distribute the business in the event of a divorce.
2. Consider starting your business as a corporation or LLC – A corporation or an LLC is a separate legal entity. This means that the company holds ownership of its assets and not you, the owner. But, if you use your marital assets (including the salary you’ve earned while married) to finance the business, the court can consider that contribution in a divorce.
3. Buy out your ex – You can also decide to buy out your spouse during the divorce. However, this will require that you agree with your partner to come to reasonable terms.
It is always important to have a rational discussion with your partner on how to treat your business in a divorce. Being open, honest, and civil about your business interests is more likely to protect your interests.