For small business owners in Virginia, going through divorce may have an added complication that most other couples will not have to face. Like any other asset owned by one or both spouses, a business may be considered part of the marital property. In other words, in order to keep your business, you may have to pay your spouse part of its value.
This may make sense for couples who ran the business together prior to divorce. But what about when one spouse owned and ran the company, while the other spouse was not involved at all?
When it comes to division of property in divorce, Virginia is an equitable division state. That means that each spouse is entitled to a share of everything that is considered marital property. If you start a business after getting married, there is a good chance that business will be considered an asset to be added to the marital property pile. It does not matter if the company is in both spouses’ names or not.
Though it may seem like breaking up a partnership that never existed, there is a reason behind this principle. Even if one spouse did all the work to start the company and keep it going, he or she likely had the help and support of his or her spouse from the outside. Perhaps the spouse earned money at his or her job to allow the new business to become reality. Or maybe he or she helped keep the house and raise the children, giving the business owner more time to devote to the company. Therefore, the principle goes, the business may not have succeeded without the spouse’s contributions, and he or she is entitled to a share of it.
Once it is determined that an asset like a business is marital property, it is necessary to get an accurate value for the asset. In our next post, we will discuss how that happens.
Source: Richmond Times Dispatch, “Business owners and divorce,” Christopher H. Macturk, Feb. 3, 2014