Arizona Complex Divorce: Dividing a Business

Business valuations and appraisals in an Arizona divorce case are necessary when one or both spouses have an ownership interest in a business. Business issues only arise in a small percentage of divorce cases due to the relatively limited number of business owners compared to the significantly larger number of employed individuals. That makes it important to work with a divorce attorney who has a lot of experience in dealing with how a business is divided and complex divorce. The court may not only divide the value of the business based upon its value but may also divide business profits earning while the divorce is pending.

Courts will almost never simply hand over the operation of the business to both spouses as equal owners. In some cases, a Court may be prohibited from awarding each spouse equal ownership in the business if, for example, there are other non-related owners of the business whose interests would be affected by forcing that person to operate the business with the non-participating spouse.

Both spouses typically have a vested interest in completing a business evaluation and appraisal to assign a value to the business. Specifically, the spouse who will retain the business after the divorce has an interest in establishing its value because the court will likely order the business interest sold if reasonably reliable evidence of the value of that business is not presented to the court at trial. The non-participating spouse, likewise, has an interest in the business evaluation and appraisal because he or she should expect to receive a fair share of the community property interest in that business.

In the event of a business created and built entirely during the marriage, the community would usually have an interest in the value of that entire business. If the business was owned before marriage but increased in value during the marriage, the community does not have ownership in the business but may have a community lien for any increased profits and increased value of that business.

It is incredibly important to understand the various business appraisal methodologies an appraiser may apply. Many divorce attorneys leave it up to the business appraiser to make an income determination related to a business on their own and to make the valuation decisions on their own. Different assessment approaches in an Arizona case can bring about enormous differences in the value of a community business.

Understanding and being able to effectively argue which methodology is best for each client requires your attorney to understand the methods used to appraise a business in an Arizona divorce. Retaining a divorce lawyer who understands the intricacies of proper business evaluations and appraisals is, therefore, critical to ensuring a fair and accurate assessment of the value and income derived from a business.

If you own a business and are going through a divorce, please contact our experienced Attorneys at LASITER & JACKSON at (602) 234-5900 to schedule your free 30 minute consultation.

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