Kelly Byrnes & Danker, PLLC

Divorce and what may happen to a business

Virginia business owners who are getting married might wonder how they can ensure that the company does not become a point of contention if there is a divorce. With a prenuptial agreement, the couple can establish that the business is separate property, and it will not be part of the process of property division in a divorce.

If both spouses are co-owners, they may also want to make a plan. This could be continuing to own the business despite the divorce, or it could mean one person agreeing to sell the company to the other in the event of divorce. A prenup might also name a certain percentage of the business that a spouse will get if there is a divorce. If a couple is already married, these provisions could be stated in a postnuptial agreement.

Some people are hesitant to raise the issue of or sign a pre- or postnuptial agreement, but there are other ways to ensure that a business is not transferred to a former spouse in a divorce. This can be established with the company's organizing documents as well. Furthermore, by keeping accurate financial records, a business owner can ensure that the valuation process proceeds as smoothly as possible. Funding sources and all financial transactions should be kept separate from personal and marital finances.

In a high-asset divorce, there may be other property that can lead to complexities in property division. Some couples may have expensive collections, such as artwork, that must also be valuated before it can be divided. If each person has a different appraiser, this can be a long process. While in some cases it might seem easier to sell an asset and split the proceeds, this could incur significant taxes. To split a pension or a 401(k), a couple will need a complicated document known as a qualified domestic relations order.

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Kelly Byrnes & Danker, PLLC

Kelly Byrnes & Danker, PLLC

3975 Fair Ridge Drive
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Fairfax, VA 22033

Phone: 703-224-0888
Fax: 703-268-5888
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105 Loudoun St, SW
Office #4
Leesburg, VA 20175

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