There are many situations in which a business owner may be worried about the future of his or her company. One is if he or she is getting divorced. Major concerns about what will happen with the business in property division can arise.
One thing that can add some clarity to the matter is if a prenup or postnup was formed that touches on the company. Such agreements can contain terms outlining how exactly a business will be treated in a divorce. These are a common tool for business owners to protect their interests in their company should their marriage end.
What if there is no prenup or postnup? It is common for a business to be deemed marital property in a divorce, meaning it is subject to division. Here in Virginia, such assets are to be divided in a fair and equitable fashion. So, when a company is found to be marital property, a fair arrangement will need to be reached, whether through negotiation or litigation, regarding what will happen with it.
There are three main types of such arrangements:
- One spouse keeps the company, buying out the other
- Both spouses retain interest in the business and continue to run it together
- The company is sold, with the spouses splitting the proceeds
Which of these routes would be the right one for a given divorcing couple depends on their goals and the situation. Also, when pursuing any of these three options, it is important for a person to take steps to ensure their rights and interests are protected. So, when property division issues regarding a company arise in a divorce, it can be critical for an individual to have quality guidance and strong advocacy on his or her side.