Businesses are as complicated as marriages
Maintaining a family business, like divorce, is a process that requires attention to detail and the ability to understand the needs of other people. You can’t just shut down a business because things became too tough or because you grew apart from your spouse.
You have employees who depend on their salaries for their food and shelter. You have customers who depend on your products or services for their businesses or livelihoods. You have suppliers depending on getting paid on time so they can pay their own bills. And you may have children who are interested in going into the family business. It’s crucial to think about how your divorce can affect all these areas.
A couple can co-own a business after a divorce
It’s important to remember that, just like any other asset, a business is considered part of the marital property. If you own a business with your spouse and are divorcing, you have many options for how to handle it. In some cases, both partners may continue to own and operate the business together. But this scenario depends on either party’s desire to continue to work together and act amicably.
One spouse can buy out the other spouse’s stake in the business
Another option is for one spouse to buy out the other. This can be especially complex if the business has more than one owner. Depending on the size of your business, there may not be enough money to pay everyone what they are owed; in that case, a valuation expert can help you determine how much each co-owner should receive.
If your spouse’s name is on your business mortgage or credit card account, that debt has to be paid off before you can close those accounts or sell the property—even if you think it’s unfair for him or her to profit from that money.
Consider mediation to help decide the future of the family business
For couples with businesses worth less than $6 million, the family business is treated like any other asset and would therefore go through the division process. Mediation law can serve to avoid court and help smooth out the process. Divorce mediation allows you to work out an agreement that works for both spouses and your family business while avoiding lengthy litigation. The divorce mediator can help you explore options and negotiate a solution without going to court.
Using mediation has many benefits over traditional divorce proceedings. The process gives you more control over the outcome of your case rather than leaving it up to a judge who may not fully understand your unique situation. Having control over how your family business is divided in divorce can help you maintain good working relationships after your marriage has ended so that everyone involved can move on with their lives as quickly as possible.
There’s no easy answer here, but there are plenty of ways to get through it
It’s important to remember that there is no one-size-fits-all answer when it comes to divorce and handling the family business. Every couple and every business relationship is unique, so the best thing you can do is sit down with an experienced attorney and talk through all of the options. The end of your marriage doesn’t have to mean the end of your family business if you don’t want it to, but even if that does feel like the right decision for you, there are still many ways for both parties to walk away happy with their share of its worth.
Stuck in a situation regarding divorce and a family business and don’t know where to start? Contact family law attorneys Alan Plevy at abplevy@smolenplevy.com or Kyung (Kathyrn) Dickerson at kndickerson@smolenplevy.com for assistance.
About the Authors
Alan Plevy
Alan Plevy is a recognized force in family law, mediation and litigation, with more than 40 years as one of the most experienced divorce lawyers in Virginia. Mr. Plevy is known for being a tenacious litigator and negotiator who is zealously devoted to his clients. A top legal publication, Virginia Lawyer Weekly, noted Mr. Plevy’s impact on the law when it named two cases he litigated among its Top Five Landmark Family Law Cases in Virginia. Those two cases, which date back to the 1980s, are still regularly cited by attorneys and courts.
Kyung (Kathryn) Dickerson
Kyung (Kathryn) Dickerson is a principal at SmolenPlevy in Vienna, Virginia. She is a graduate of the University of Virginia and George Mason University School of Law, where she served on the Board of Editors for the Journal of International Legal Studies. Ms. Dickerson is also presently General Counsel for the Asian Pacific American Bar Association of Virginia and has served as President of the organization and on its Board of Directors. She has also served on the Board of Directors of the Virginia Women Attorneys Association and served as its President. She has served on numerous committees of the Fairfax Bar Association and as President of its Young Lawyers Section and as Co-Chair of the Revenue Development Committee.
