A business can be an important financial asset. Couples in Virginia who own one together should make sure that they have a way to protect it should they get divorced.
Before getting married, couples who are co-owners of a business may opt to complete a prenuptial agreement. The agreement is a legal document that allows them to specify how the business should be handled if they get divorced. In community property states, it can avoid having the court divide the company between the estranged spouses.
Instead of a prenup, some yet-to-be married couples may opt to complete a buy-sell agreement that can protect the family business from the impact of a divorce. The buy-sell serves as a contract between the co-owners and stipulates what should take place if one of the co-owners decides or is forced to leave the business or dies. An effective agreement would require a former spouse to sell to the company’s other owner any business interest or shares that was received in the divorce settlement.
For couples who have substantial family business assets that they want to preserve for future generations, a trust can be used to protect the assets in the event a member of the next generation goes through a divorce. A provision can be included that requires that during a divorce, the spouse of a son or daughter can have no access to the assets as long as the assets remain within the trust.
A divorce attorney may provide valuable guidance for clients who are attempting to resolve property division issues regarding family businesses during a divorce. The attorney may protect a client’s interests by ensuring the valuation of a business is accurately calculated and that the terms of the divorce settlement align with the client’s goals.