Couples going through divorces often focus on the biggest assets when strategizing for their future or litigating with their spouse. Marital homes and retirement accounts often become points of contention for high-asset couples.
Any business or professional practice that you or your spouse own could also represent significant value in your divorce. How do the Virginia family courts typically handle the division of a business as part of a divorce?
A business is an asset just like any other property
The Virginia family courts will treat a business like other assets. The first determination they make will usually reflect whether the business is marital property or separate property. This decision will determine whether or not the courts have the right to divide the value or ownership interest of the business between spouses.
If one person owned a business before marriage or inherited it, the company might be separate property. There could also be a marital agreement that establishes that the business is not subject to division if a couple divorces.
Barring those situations, a business started and operated during a marriage could likely be marital property. If someone used income or assets that they earned during the marriage to start a business or professional practice, the business itself might be marital property even if the other spouse has never worked there or directly financially contributed to the company.
How do the courts handle the actual split of the business?
In Virginia, the courts use the equitable distribution standard that focuses on fairness for property division. If they do split up the business, they will do so in a way that reflects your family’s financial circumstances fairly. The length of the marriage, the financial and unpaid contributions of each spouse to the household and even the health of the divorcing spouses can influence exactly who gets what.
The court might grant one spouse more ownership than the other in the business. They might give the spouse without a direct interest in the business more assets from other areas of the marriage and let one spouse keep the business outright. They might even order spousal support as a means of giving one spouse a fair share of ongoing earnings from the company.
There are many potential solutions to the question of how to split up the business. If you would prefer to retain control over that process, negotiating with your spouse or going through mediation to file an uncontested divorce might be a good choice for you.