by Patricia Glover, Certified Legal Document Preparer
Arizona is one of only nine community property states. Under community property laws, both spouses own everything acquired during their marriage equally.
Half of all first marriages end in divorce, and that rate is substantially higher for second and third marriages. If you are married in or living in Arizona, your assets may be divided in accordance with community property laws even if some or all of those assets are titled in only your name.
When forming or amending a business, the members (or partners) — to protect business assets from a spouse (or worse, a partner’s spouse) — should create an operating agreement, which outlines, at minimum, the distributions of profits and losses, liability of members, dissolution and assignment rights, successors and agents, and creditors and third parties.
The business formation documents should also include spousal disclaimers (where each member’s spouse waives his/her right to the business) and a designation of beneficiaries (outlining what will happen to each member’s share of the business in the event of his/her death).
Following these simple business steps can save tens of thousands of dollars in future litigation costs.