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What Business Owners Should Know about Divorce and Property Division
Even the most basic divorce in which both spouses are on the same page and are committed to amicably negotiating the terms has its own complications. While most divorces are more challenging than this example, one of the factors that nearly universally complicates divorce is business ownership. If you own a business and are facing a divorce, you should not wait to consult with an experienced Virginia divorce attorney who has extensive experience successfully guiding these highly complicated cases toward beneficial resolutions.Â
The Division of Marital Property: The Basics
In a Virginia divorce, the basics as they relate to the division of marital property include all the following:
- Those assets that you acquire – as offset by those debts that you take on – during your marriage are considered marital property. It does not matter whose name is on the title or who made the purchase – if it came to you during your marriage, it’s almost certainly marital property.Â
- The only exception to the above rule is any gifts or inheritances that are made in your or your spouse’s name only during the course of your marriage.
- Your marital property will be divided between you equitably – or fairly – upon divorce.
- The separate property that you bring into your marriage with you will only remain separate if you keep it disentangled from your marital finances throughout the course of your marriage, which is a very high bar.
- Even if you are able to keep an asset separate throughout the years of your marriage, any increase in its value will be considered marital.Â
Owning a Separate Business
Even if you owned your business when you married and made sure to keep it strictly separate while you were married, there is still the matter of any increase in its value to contend with, and this is likely to require serious forensic valuation efforts. If any of the following, however, apply to your situation, your business is unlikely to stand as a separate asset in the eyes of the law:
- If you invested family funds in the businessÂ
- If you run the business without paying yourself a fair working wage, which decreased your marital assetsÂ
- If your spouse helped out at the business or worked there
- If you did not keep your business financials strictly separate
Owning a Business Together
If you and your spouse own the business together, one of you will likely need to be bought out and walk away from it upon divorce, which can add an additional layer of complications. Selling a business in order to divide the value is generally not a great answer, and one of you will likely also be losing his or her livelihood (or part of it) by walking away. Additionally, there is the matter of obtaining a mutually acceptable business valuation and the fact that a business can serve as a great vehicle for hiding assets. When you add it all up, there are more than enough complications to go around.Â
An Experienced Virginia Divorce Attorney Has Your Back
The accomplished Virginia divorce attorneys at Mahoney Richmond Thurston, PLLC, understand the complexity of your situation and have the legal savvy to help. To learn more, please don’t put off contacting us today.
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