What Happens to Your Business in Fairfax, Virginia, after Divorce?
Owning a business during your marriage could have helped to provide the financial stability you needed, or it could have been a core problem in your relationship. Now that you are planning to divorce, you may be unsure what will happen to your business. To get clear information on your unique situation, reach out to our Fairfax business divorce attorney to learn more about your rights and what to expect.
Take a few minutes to consider what you would like to occur. In Virginia, assets are not always divided 50/50, which means that it may be possible for one spouse to maintain the business after the divorce. However, in some situations, the sale of the business becomes necessary so that the value can be split equitably between the couple.
Before going further, determine what you want from your business or that of your spouse. What is best suited for your new life? When you consider all of the pros and cons, you’ll have the insight you need to pursue legal action.
Our Fairfax business divorce attorney at the Law Office of Afsana Chowdhury, PLC, can help you make the best decision for your future. Don’t head to court or file your divorce without a careful plan for what to do in these situations. Let us guide you through the process.
How is Business Valuation Performed in a Divorce?
One of the first steps in this process is to determine the value of the business. A business’s value depends on many things, not just the fair market value if the property is sold. The court will consider the intrinsic value of the business, which is not always as clear or easy to understand.
Most of the time, this will require taking a look at the company’s financials.
Some factors may include the following:
- Income excess earning: When there is a professional practice, such as a medical or dental practice, involved, this type of valuation is typically used. It considers the average income of what could be considered a peer. If the spouse’s income is more than what is considered typical peer earnings, that is considered excess income. It is then considered a part of the value of the company.
- Market valuation: It is not always necessary to sell the business, of course. However, market valuation can provide some insight into what businesses like it in the area have recently sold for, providing some indication of the value of the business.
- Asset valuation: A third option is to use an estimate of the assets owned by the business. Each valuable asset is estimated, and the total value of the company is based at least partly on this information.
How is a Business Divided in a Divorce?
Most of the time, the court will not require the business to be sold if one spouse owns it fully. For example, a doctor does not have to sell the practice during a divorce. It is also not likely that the spouse will need to continue to share ownership of the business with the other spouse.
In this type of situation, if the business is valuable, the court may elect to distribute the property in an equitable way. For example, the court may determine that the spouse that does not own the business should receive other property or assets in exchange for the ownership of the business.
Can I Sell My Business before My Divorce?
It is not common for people to want to sell a business that’s flourishing and that they wish to continue prior to their divorce. There are some situations in which selling the business prior to divorce may seem beneficial, especially in situations where both owners may not want to maintain it any longer. It is possible to sell the business prior to the divorce. The business will remain a significant financial asset and likely will be a component of the property division ordered by the court.
What If You Co-Own Your Business?
It is not uncommon for married couples to co-own their business, which means both parties share ownership of it. In this case, the business is treated as marital property. Like other marital property, it must be divided in an equitable way during the divorce.
If both parties own the business, one party cannot sell the property without the consent of the other. That can create some turmoil during the divorce process, but it may still be possible to move forward. In this situation, the court may decide that the spouse that wishes to maintain the business must compensate the other spouse. The amount paid to the spouse would be dependent on other property, individual income, and the length of the marriage.
The division of a business can be difficult, especially if each party wants to remain active in it. It may be necessary to come to an agreement and outline the specifics of your situation. The key here is to determine, with the help of mediation, if necessary, how the business can move forward with both working at the business.
There are some situations where this may simply not work, and in those cases, the court will decide who will receive the business and what other property divisions may be impacted by this decision. If you co-own your business, it is critical to have a highly experienced Fairfax business divorce attorney to help you with this process of division or creating a structure for future ownership.
Contact a Business Divorce Attorney Near You for Help
The Law Office of Afsana Chowdhury, PLC, is ready to help you. When you meet with our Fairfax business divorce attorney, we can offer insight into your specific situation and make recommendations for legal strategies you can take to achieve your goals. Don’t head into court without our compassionate and dedicated legal support.
Our business divorce attorney services all of Fairfax County, including Centreville, McLean, and Reston, as well as Arlington, Loudoun, and Prince William counties. Contact us today.