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Divorce and the family business

On Behalf of | Apr 26, 2022 | Family Law

Divorces in Virginia are often complicated and contentious when there are extensive financial assets involved. Many couples in the state have operated family businesses that have gained value as a marriage has gone along. However, when it comes time for divorce, the assets generated by those businesses can get called into question by either party. Disagreements are common, and the business might take precedence over all other dynamics of the separation. This is why it is important to think the implications out before actually taking the step to file for divorce.

Prior planning

While issues in a marriage can change quickly, marriages that involve business management are more entailed than a simple divorce with little marital assets to be divided. Not only are lives affected, but livelihoods are affected as well. Many families that own business even plan for a potential future separation when they form their businesses, which should indicate how important these issues are.

Final disposition

The final ruling when a mediation process is not successful will generally be based on the business entity format and detailed ownership. Some settlements may involve one spouse remaining as a partner while the other continues operating the business; other settlements can result in a full financial payoff. For divorcing couples with financial solvency issues, this payment can also be set up in installment payments to one spouse in exchange for full ownership of the business.

All final decrees regarding businesses in a divorce usually depend on the entirety of the family financial statement. Businesses are considered an asset per se, but there can also be questions of liability for both the couple and their business when the business is a separate financial entity. It is always best to prepare for a divorce ahead of time, especially when owning a business.