When couples in Virginia who are getting a divorce own a business, they will have to decide whether they want to keep it or sell it. Some couples decide that they will keep running the business. However, this is unusual since most estranged couples are not able to set aside their differences enough to work together effectively.
A more common solution is for one to leave the business and be bought out by the other. The value of the business will need to be determined through an appraisal. Once this is done, if one spouse has the liquid assets to buy out the other spouse directly, this will not be considered a taxable event since it is related to the divorce. Spouses who do not have this liquidity can pay off the other spouse over a longer period of time with a promissory note. Another option is for the company itself to buy out the spouse who is departing.
If neither spouse wants to continue running the business, selling it might seem like a simple solution, but this is not always the case. The business may not sell immediately. In the interim, the couple will need to decide whether one or both of them will continue to run the business. Choosing to sell the business could mean the divorce process is slower.
A business is only one element of property division the couple will have to deal with, and it is not even necessarily the mosy difficult one. A couple who has a home they wish to sell may run into a similar problem of not being able to sell it immediately. Some retirement plans require a complex document called a qualified domestic relations order before they can be divided. Valuable collections and other complicated investments may also need to be split.