There are many ways that adults in West Virginia may become business owners. Sometimes, they start a professional practice after finishing a graduate degree. Other times, they might inherit an already operational company from a family member who is ready to retire or who has recently died. Some workers at small businesses will have an opportunity to buy a company from their employer when that individual decides to retire. There are even people who buy into franchises as a way to start generating business revenue quickly with minimal research and development.
Regardless of how someone becomes a business owner during marriage, they may have to share some of what their company is worth with their spouse during a divorce in West Virginia due to the state’s equitable distribution law.
How can business owners protect their interest in their company as they navigate the property division process?
They establish it as separate property, if possible
One of the common solutions for protecting a business’s value during a West Virginia divorce is to prove that it is separate property that is not part of the marital estate. If someone talked about the business in a marital agreement or if they owned it prior to marriage, they may be able to keep the business out of the property division process entirely.
They are cautious about valuation
Business valuation looks at what assets are worth and the income a company will generate in the future. Being very cautious in the process of establishing a business valuation can reduce how much of a company’s value someone has to worry about losing in their divorce proceedings.
They settle outside of court
Equitable distribution rules in West Virginia leave a lot under the authority of the judge hearing the case during a contested divorce. Divorcing spouses have very little influence over the outcome of litigated property division matters, which is why many business owners prefer mediation or collaborative divorce. If spouses reach a mutually agreeable divorce settlement, they have total control over the property division terms instead of asking a judge to make those choices.
Discussing the business that someone owns and other high-value assets with a lawyer can help them find an effective way to protect their business investment during a divorce. In these scenarios, being proactive is often the key to potential success.