If you are a business owner going through a divorce, it is understandable that one of your primary concerns during asset division is your company. Virginia follows equitable distribution rules during divorce. The court splits any property considered as marital between the couple. As such, if your business falls into that category, a judge can order you to split it with your spouse.
Below are four ways to help you determine whether your Virginia business counts as a marital asset.
Based on when the business was founded
Like other assets and savings you own before marriage, any business you already have will also count as separate property. In general, these assets will remain separate property unless commingling happens.
Based on your use of marital funds
If you have an existing company before marriage, you may need to double-check the accounts you used for official business dealings throughout your marriage. Using marital funds for your business counts as commingling. As a result, the court may consider your business a marital asset.
Based on how you acquired the business
Inherited businesses count as separate or nonmarital assets. The same rule applies to businesses you acquired or received as a gift. If you inherited money and used it to finance your business, the courts will still consider your company as separate property.
You may need to show proof that your business capital is traceable to an inheritance or gift. Examples of proof you can provide are bank statements, wills and trusts.
Based on existing agreements
Existing valid contracts may exclude your business from becoming marital property and ensure it remains only under your name after divorce.
Prenuptial agreements are generally recommended if you have a business before entering marriage. Meanwhile, a postnuptial agreement may help protect your business ownership if you started the company while married.
Ensure your business remains yours after divorce
Keep track of all your business transactions and paperwork, especially ones that can prove the source of your capital, operational finances during your marriage and more. Additionally, a seasoned divorce attorney can help protect the ownership of your business and offer assistance to prepare you on what else to expect during asset division.
