Virginia courts consider all assets and debts acquired during the marriage marital property, except for individual gifts or inheritances. This includes fixed assets like businesses, even if only one spouse started or grew the company during the marriage.
But how can the court divide a business into various tangible and intangible assets such as real estate, equipment, and intellectual property?
The court brings in valuation experts
These experts are usually highly qualified, certified valuation analysts (CVAs) or certified public accountants (CPAs). They choose the best method to value the business based on its type and the available information. Common methods include:
- Asset-based: This method calculates the business’s net worth by subtracting liabilities from assets.
- Income-based: This approach uses past earnings to predict future profits, analyzing the business’s ability to generate income.
- Market-based: This method compares the business to similar companies recently sold, providing a market value estimate.
The CVA or CPA presents their valuation report during the divorce proceedings. Both spouses may also have their own experts and valuations. The court will consider all reports and expert testimonies to decide the business’s value.
The court divides it equitably – not equally
The state follows the principle of equitable distribution. This means the court tries to divide assets and debts fairly between the spouses rather than a 50-50 split. They look at factors like how long the marriage lasted and how the division will affect the business’s operations. The court also considers each spouse’s contributions to the marriage, their financial situations and how the division will affect their future finances.
The goal is to reach a fair outcome based on the unique details of each case. The court might decide that both spouses should continue to own the business together or that one spouse should buy out the other’s share. They can also order the sale of the business, dividing the proceeds between the spouses.
Secure your financial future today
Divorce can be a challenging and emotional time, but it is crucial to protect your hard-earned assets and advocate for what you deserve.