Does a spouse have any right to business value in divorce?

On Behalf of | Nov 15, 2023 | Divorce

In Arkansas divorce proceedings, the question of whether a spouse holds any entitlement to the value of a business can be important. State laws provide a framework that seeks to balance the interests of both parties involved. For example, Arkansas adheres to the principle of equitable distribution.

This principle aims to ensure a fair and just allocation of property, taking into account various factors such as each spouse’s contribution to the marital estate, the duration of the marriage and the economic circumstances of each party.

Distinguishing between separate and marital property

Necessary for understanding a spouse’s right to business value is the distinction between separate and marital property. Generally, property acquired during the marriage is marital, while assets obtained before the marriage or through inheritance may be separate. However, the appreciation of separate property during the marriage could become subject to equitable distribution.

The business as marital property

Small businesses in Arkansas make up 99.3% of all businesses in the state. If one spouse established or significantly grew a business during the marriage, it may be marital property.

In such cases, the value of the business could be subject to division between the spouses. The court may consider factors such as the direct or indirect contributions of each spouse to the business, including financial and non-financial support.

Valuation challenges and considerations

Valuing a business can be complex. The parties may engage financial experts to assess the fair market value, taking into account factors such as the company’s earnings, assets and market conditions.

While Arkansas seeks equitable distribution, this does not necessarily imply an equal split of assets. The court aims to achieve a fair outcome based on the unique circumstances of each case.