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From Experienced Charleston Family Law Attorneys

Divorce and your business

On Behalf of | Apr 18, 2022 | Divorce

Business owners often have a specific problem when they get a divorce, and especially if the business began after the marriage became legally effective. This applies in equitable distribution states like West Virginia where the courts make the final decision regarding who owns what unless a divorcing couple works it out before a final decree is signed. And the issue can be very complicated regardless of whether there are other extenuating financial factors in the divorce such as significant family wealth. But regardless of the size of a family financial portfolio, the same basic issues will apply to any particular business.

Family priorities

The first issue with a business in a divorce is what will take priority in the lives of the spouses and even the family for that matter. And many times an acceptable settlement could result in a forced sale on the business. What to do going forward will have a major impact on what is finally decided in a divorce for business owners, and it can set the whole scope for the final property distribution agreement.

Business valuation

Cash assets and liabilities can be complicated just like the actual valuation of the operation. Even when a business began before a couple was married, the spouse who did not own the business at the time of marriage will still have a claim to earnings accrued while the marriage was in effect. The more important issue in many cases is an accurate evaluation of the business itself when a marriage ends and the divorce is finalized.

The most effective method of arriving at an equitable amount of ownership is to have a business valuation professional conduct a valuation study that can calculate an acceptable number for both parties. The real truth is that sometimes the final agreement will also require some adjustment on the part of both parties.