Navigating Debt in Divorce: What Oklahoma Business Owners Need to Know

The Financial Fallout of Divorce: A Real-World Example

A recent high-profile divorce highlights the significant financial challenges that can arise. Olympic swimmer Ryan Lochte and his wife, model Kayla Rae Reid, announced their divorce after seven years of marriage. Court documents reveal that the couple accumulated nearly $270,000 in debt during their marriage, including unpaid IRS taxes, medical bills, and homeowner association fees .

This case underscores the importance of understanding how debt is categorized and divided in divorce proceedings. In Oklahoma, debts incurred during the marriage are generally considered marital property and subject to equitable distribution. This means that even if the debt is in one spouse’s name, both parties may be responsible for repayment.

Understanding Debt Division in Oklahoma Divorces

As an Oklahoma business owner, it’s essential to understand how both assets and liabilities are handled in divorce:

• Marital Debt vs. Separate Debt: Debts incurred during the marriage are typically considered marital debt, regardless of whose name is on the account. Separate debts, such as those incurred before the marriage, may remain the responsibility of the individual who incurred them.
  
• Equitable Distribution: Oklahoma follows an equitable distribution model, meaning that debts and assets are divided fairly, but not necessarily equally. The court considers various factors, including the length of the marriage, the financial and non-financial contributions of each spouse, and the economic circumstances of each party.
• Impact on Business Assets: If your business was established during the marriage, it may be considered a marital asset. The court may award a portion of the business value to the other spouse, or it may order the business to be sold to satisfy debt obligations. Additionally, any increased value in your business or new asset held by your business during marriage may be considered marital assets – subject to marital division. It is crucial to work with an Oklahoma family law attorney with experience in representing business owners during divorce to ensure you avoid common pitfalls in the process. Working with an Oklahoma divorce lawyer with experience representing business owners will increase your chances of keeping your business and in reaching a fair valuation of the business to buy out your spouse’s interest, if it is subject to marital division.
  

Protecting Your Business from Marital Debt

To safeguard your business interests during a divorce in Oklahoma, consider the following steps that maintain the separate nature of your business:

• Maintain Clear Financial Records: Keep detailed records of all business transactions, including income, expenses, and any personal funds used for business purposes. This documentation can help distinguish between personal and business finances.
  
• Establish a Prenuptial Agreement: A well-drafted prenuptial agreement can define the division of assets and liabilities in the event of a divorce, protecting your business from being considered marital property.
  
• Consult with a Financial Expert: Work with a financial advisor or forensic accountant to assess the value of your business and determine how marital debt may impact its worth.
• Seek Legal Counsel: An Oklahoma divorce attorney with experience representing business owners can help you navigate the complexities of debt division and develop a strategy to protect your business interests. Additionally, if you are not married yet you have