Divorce Attorneys for Business Owners in Maricopa County, AZ

Overview

Business divorces are decided long before trial. They are decided by who documented the company properly, who retained a credible valuation expert, and who avoided doing something in the first two months that undermined their position for the rest of the case.

Call for a free consultation and we will tell you which of those you are currently getting wrong.

The framework

How Arizona Treats a Business in Divorce

Three statutes carry most of it. A.R.S. § 25-211 makes property acquired during the marriage community property, with exceptions for gift, devise and descent and for property acquired after service where a decree follows.

A.R.S. § 25-213 defines separate property as what a spouse owned before the marriage or received by gift, devise or descent, together with the increase, rents, issues and profits of that property. A pre-marital business starts separate. Community effort and community capital can still generate a community interest in its growth.

A.R.S. § 25-318 then governs division. The court assigns each spouse their sole and separate property and divides the community equitably, though not necessarily in kind, without regard to marital misconduct. It may also weigh debts and obligations related to the property, including accrued or accruing taxes that would become due on receipt.

What drives the number

Normalisation, Goodwill and the Valuation Date

Three things move a business valuation more than anything a lawyer says at a hearing.

Normalising earnings. Owner compensation above or below market, personal expenses run through the company, related-party rent and family members on payroll all have to be adjusted before the earnings mean anything. This is where a forensic accountant earns their fee.

Goodwill. Value belonging to the enterprise is generally divisible. Value existing only because of the owner personally is treated differently, and the split between the two is argued in almost every case.

The valuation date. In a business that is growing or contracting, the date chosen can be worth more than any characterisation argument, and it is frequently agreed without much thought by people who have not modelled which way it cuts.

Timing of filing sits alongside all of it. Because the community generally closes on service, a business owner contemplating a sale, a large contract or a distribution should take advice before filing rather than after.

The first sixty days

The Injunction, and the Mistakes Owners Make Early

On filing, A.R.S. § 25-315 issues an injunction restraining both spouses from transferring, encumbering, concealing, selling or otherwise disposing of community property, except as related to the usual course of business, the necessities of life, or court fees and reasonable attorney fees, without written consent or the permission of the court.

The usual course exception keeps businesses trading and is read sensibly. Payroll, suppliers, ordinary contracts and existing credit lines are fine.

The mistakes that damage cases are predictable. Moving money to a relative or a new entity. Suddenly paying yourself far less so the support figure looks better. Removing a spouse’s access to accounts or signatory authority. Deleting records. Each of these is easy to prove and each costs credibility on every other contested issue.

The injunction has the force of an order of the superior court signed by a judge and is enforceable by contempt, binding the petitioner from filing and the respondent on service or actual notice, whichever is sooner. Where something genuinely necessary falls outside routine trading, seek consent or an order in advance.