How Does Divorce Impact my Business or Business Assets in Virginia?
June 16, 2023Author: Grant Moher, Esq.
How Does Divorce Impact my Business or Business Assets in Virginia?
Divorce is already complicated enough without also having to split up a business at the same time potentially. Let’s examine how a Virginia court will handle a business during divorce and how a Fairfax divorce attorney can help.
How the Divorce Court Will Handle Your Business
Here is a step-by-step look at what a court in Virginia will do when dividing up marital assets and coming across a business entity:
The first thing the courts will do is identify the business and determine how the title is held (the legal ownership). Regardless of how the property is titled, if it was acquired during the marriage or substantial personal effort of either party during the marriage contributed to its value, the court will presume that the property is marital unless proven to be the separate property of either party.
The next step is figuring out if the business is separate property, marital property, or some fraction thereof.
Once the court determines that the business is, in fact, marital property and therefore falls within the scope of the divorce, the court may assign it a value. An appraiser may be brought in to review and report back to the court. Your lawyer can help you understand rights and responsibilities during the business valuation.
At that point, the court rarely calls for a thriving business to be sold so that it can be split in half. Typically, the court will make a monetary award to the spouse who isn’t keeping the business after the divorce. Essentially the spouse keeping the business will be ordered to pay the other spouse for their portion of the business. That number is determined based on a variety of factors. There are different ways to evaluate a business, and you need to ensure you get a fair appraisal – whether you are buying out your spouse or receiving the funds.
If both your and your spouse’s names appear on the deed to the business and it is indeed a marital asset (or liability), the divorce court may not even be able to split it up. Often issues like these are resolved in mediation or arbitration.
If You Have Third-Party Business Partners
There is almost always room for creative restructuring if a business partnership has more than two owners. In such cases, remaining partners can assume new roles, use this opportunity to buy you out, or retire during this process. Again, one partner can buy out the other, the business can be sold, restructured, or dissolved completely, or the remaining partners can reform a new business without you and/or your spouse. There might be a buy-sell agreement in place that your attorney must consider.
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