This blog recently discussed how property division is generally handled in Virginia according to equitable property division rules. Another important aspect of the property division process that is helpful for couples who own a family business to understand is how their family business may be divided during the property division process.
Dividing a family business during divorce can be emotional and may feel overwhelming which is why the family law process serves as an important resource to help guide divorcing spouses who own a family business through the process. To begin with, it is important to value the business which should be done through an independent third-party appraisal.
Then the divorcing couple will have to determine the best method to financially divide the business for them and for their situation and each must decide on their ongoing role in the business.
The first option to consider is for both spouses to continue to own the business. This will require them to be able to work together on an ongoing basis following the divorce which may make this option impractical for many divorcing spouses. A second option is for one spouse to buy the other spouse out of the family business. In situations when the spouse wishing to buy out the other spouse and retain ownership of the business does not have the liquid assets to do so, a structured settlement that provides for payment over time may be arranged.
The third option is to sell the family business and split the proceeds. This option can delay the divorce pending the completed sale of the business.
There are several different options available to help divorcing couples handle the challenging process of dividing a family business during divorce. Divorcing couples should understand the potential benefits and drawbacks of each of the options and decide which works best for their needs and goals for the outcome of the property division process.