Starting a family business during marriage can be a smart move. An individual has more control over their schedule and their income when they run their own business instead of working for an outside company. The entire family could potentially contribute to the business and benefit from its success.
Unfortunately, starting a business during a marriage can lead to challenges if a couple later divorces. A family business can create a variety of challenges during Virginia divorce proceedings. For example, spouses often need to address the following issues when one of them started a business or they ran a company together during their marriage.
Settling future employment arrangements
If both spouses work for the family business, that can be a source of tension during divorce negotiations. One of the first issues the spouses may have to address is the future of their employment at the company. If one spouse contributes more or depends more entirely on the business than the other, that could influence how they handle the matter. Often, it is necessary for one spouse to find employment elsewhere, but some couples can create contracts that allow them to continue working together.
Establishing the marital value of the business
The business might be partially or entirely marital property depending on how someone started or acquired the company and what investments they made during the marriage. Spouses may need to agree on a business valuation and determine what percentage of that value is marital property and what remains the separate property of one spouse. Determining the likely fair market value of the company is important, as the business could play a major role in the equitable division of the overall marital estate. Regardless of whether someone hopes to continue owning or working at a family business, they may still deserve a portion of its value when dividing marital property. The future revenue generated by the business could also affect support obligations.
If spouses take this issue to family court, then a Virginia judge will decide how to address the business during divorce proceedings. Alternatively, spouses may want to attempt mediation or collaboration as a way to control the outcome of a pending divorce and achieve certain goals. Either way, learning more about how high-value assets like businesses can affect divorce proceedings may benefit those concerned about the economic consequences of the end of a marriage.