When a couple decides to end their marriage, it can be a challenge to divide assets efficiently. A divorce can become more complicated if you or your spouse owns a business. If you’re a Virginia resident, here are some things you can do to protect your company once your marriage ends.
The financial impact of divorce
Divorce can bring about major financial changes. Even if you have an uncontested divorce, you may still find that there is a claim on everything in your name, including your business.
Keep in mind that the things you acquired in your marriage are considered marital property. This includes your income, assets, stocks, bonds and savings accounts. Your business can be considered marital property as well. You’ll have to determine how much of a percentage you and your spouse will receive from the business.
Community property and equitable distribution
You need to know how much is at stake for your business when you get a divorce. Currently, there are nine states in the U.S. that are considered community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. These states divide marital assets in half in a divorce.
All other states are equitable distribution states. This means the courts will have to determine who receives certain marital assets if the couple can’t agree.
Protecting your business against divorce
Divorce can be emotionally draining, and if you’re running a company, you likely won’t be able to completely focus on work if your marriage is ending. You should think about how your business is set up. If you’re a significant stakeholder in your company and your ex receives a large portion of the stock in the divorce settlement, the company could be thrust into financial chaos.
To protect your business, it’s best to fill out documentation in advance, even when you’re not thinking about divorce. A pre- or postnuptial agreement can help keep your assets safe and keep your business intact.