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How Can I Keep My LLC Separate from My Divorce?

Consult Our Fayetteville Divorce Lawyers at Wilmoth Law Firm Today

Divorce can be complicated under the best of circumstances, but the situation becomes even more sensitive when one or both spouses own a business. If you own a limited liability company (LLC), it’s essential to understand how to protect that business interest during divorce proceedings. Personal and professional lives often overlap, and failing to maintain clear boundaries between them can put your business at risk. Knowing how to preserve your LLC may help you safeguard what you’ve worked hard to build.

Is My LLC Considered Marital Property in Arkansas?

Whether your LLC is considered marital property depends on how and when it was formed. If you created the business before your marriage and kept its finances and operations separate from your marital life, it may be considered separate property. However, if the business was started or significantly expanded during the marriage—or if marital funds or joint efforts were used to support it—the LLC may be viewed as a marital asset.

Arkansas follows the principle of equitable distribution, which means the court divides marital property fairly, though not necessarily equally. The court may evaluate each spouse’s contribution—financial or otherwise—to determine how the LLC should be handled in the property division process.

How Can I Protect My LLC During a Divorce?

There are steps you can take in advance—or even during the divorce process—to reduce the risk of your LLC becoming subject to division.

  • Use a Prenuptial or Postnuptial Agreement: The most effective way to safeguard your business is with a legally binding agreement. A prenuptial or postnuptial agreement can specify that your LLC is separate property and dictate how it should be treated if the marriage ends.
  • Keep Business and Personal Finances Separate: Avoid mixing business and marital finances. Maintain clear records, including separate bank accounts and accounting systems for your business. This demonstrates the LLC operates independently and strengthens your claim that it should remain separate property.
  • Draft a Solid Operating Agreement: An LLC’s operating agreement should include provisions for how ownership is handled in the event of a divorce. Clauses about buyouts, valuation methods, and transfer restrictions can go a long way in protecting your stake in the company.

What Happens if My Spouse is Awarded Part of the LLC?

If the court determines that your spouse has a claim to part of your LLC, the outcome could vary depending on the circumstances. You might be required to buy out their share using personal assets or financing options. In some cases, a spouse may be granted a non-controlling interest, meaning they are entitled to a portion of the profits but cannot make business decisions.

Regardless of the result, it’s important to have legal and financial professionals involved to ensure the resolution is fair and sustainable for you and your business.

How Can a Fayetteville Divorce Lawyer Help?

A knowledgeable divorce lawyer can be instrumental in helping you protect your LLC during a divorce. The attorneys at Wilmoth Law Firm can assist with:

  • Drafting or reviewing prenuptial and postnuptial agreements.
  • Structuring operating agreements to include divorce-related clauses.
  • Evaluating whether your LLC is marital or separate property.
  • Coordinating a business valuation with trusted financial experts.
  • Negotiating divorce terms that support your long-term business goals.

Consult Our Fayetteville Divorce Lawyers at Wilmoth Law Firm Today

Divorces involving business ownership require both legal precision and strategic planning. At Wilmoth Law Firm, we understand the stakes involved when a business is on the line. Our Fayetteville divorce lawyers are ready to guide you through the legal process with your financial and professional future in mind. Call 479-443-8080 or contact us online for a free consultation. Located in Fayetteville, Arkansas, we serve clients in the surrounding areas.