Why You Should Value Your Family-Owned Business in a Virginia Divorce
Settling a divorce case in Virginia can be challenging, but things get even more complicated when one of the parties owns a business, or both spouses co-own a family business.
Virginia family law treats a business as “property,” which means it may be divided upon divorce like your marital home. That is why it is critical to establish the value of your family business when getting divorced.
Valuing a family-owned business is important to allow both spouses to make informed decisions about how to split it and determine which party retains which assets after the divorce is final. Contact a Leesburg family law attorney to evaluate your family-owned business in Virginia.
Why Do You Need to Value Your Business in a Virginia Divorce?
In a Virginia divorce, all property and debt must be valued in order for soon-to-be-ex-spouses to understand the actual value of their marital property. And since a co-owned business is considered marital property, it will be split between both parties, just like their marital residence, investment accounts, retirement assets, and others.
Knowing how much your family-owned business is worth allows parties to use it as their bargaining chip when negotiating a fair divorce settlement.
Does Virginia Law Require You to Value and Split a Family-Owned Business?
No, Virginia law does not legally require parties to value or split their family-owned business. In some cases, parties agree to leave their co-owned businesses out of the divorce settlement.
Usually, they treat their business as one of the spouse’s “job” or a source of income that is not meant to be part of the settlement negotiation process. Although it is not recommended to exclude any assets from your divorce negotiations – after all, a family-owned business could be your most high-value asset – Virginia law does not prohibit divorcing couples from excluding their business from a divorce settlement.
Is It Difficult to Value a Family Business in a Virginia Divorce?
Yes, in some cases, valuing a family-owned business is an arduous task, particularly when there are no “hard assets” involved. That is why some spouses choose to leave their business out of the divorce decree to avoid the trouble and tensions with the other spouse.
Family-owned business valuations can be rather problematic and expensive, as it is not uncommon for both spouses to hire their own independent valuation experts who, after charging thousands of dollars for their services, come up with drastically different values for the same business.
Will You Have to Sell Your Co-Owned Business After the Divorce?
Many tend to believe that they have to sell their family-owned business as part of their divorce settlement. However, cases in which the business-owning spouse ends up selling his or her business are not common.
It is also rare for the business-owning spouse to share the day-to-day operations of the family-owned business with their ex-spouse after or before the divorce is finalized. Instead, parties can use the established value of the business to “trade” it for the other spouse’s other valuable assets. In other cases, the business-owning spouse chooses to pay out a portion of the value to the other spouse over time.
Either way, you need a Leesburg family attorney to establish how much your family-owned business is worth. Contact Whitbeck Cisneros McElroy, PC, to schedule a case review. Call at 703-997-4982 today.