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Splitting up a family business in an Arizona divorce: What to do

One of the more difficult issues to resolve in an Arizona divorce proceeding is the joint ownership of a family business. In many of these instances, one of the parties spends far more time working in the business than the other. Regardless, the owners of a family business are best served by specifically addressing the ownership structure post-divorce, as well as the respective responsibilities for the continued operation of the business entity.

One couple from a northeastern state opened a vegan ice cream store in 2008 that quickly became a hit. The couple obtained a divorce in 2012, and now they are back in court fighting over ownership of the store. The ex-husband claims the ex-wife is purposely running the business into the ground to his detriment. He claims she has exerted sole control over the store's finances and is cutting him out of profits. She, however, claims the store was her idea, is named after her niece and that her ex does nothing other than use money from the business to pay his personal expenses.

The ex husband has asked a New York court to dissolve the Manhattan ice cream shop. It is not known why the couple did not address these issues more specifically in their divorce. While that would appear to have been the better approach, the parties are now left asking a judge to make the property distribution decisions for them.

These post divorce proceedings underscore the importance for Arizona family business owners of confronting the financial issues head-on during divorce proceedings. Failure to do so may simply defer the problems for another day. Alternative dispute resolution options such as divorce mediation or a collaborative effort may help the parties focus on reaching an agreement that is fair to both sides while providing the opportunity for continued business growth.

Source: New York Post, "Couples divorce threatens vegan East Village ice-cream shop," Selim Algar, Jan. 28, 2013

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