Divorce is rarely simple, but the process is even more complicated when you own a business. You might wonder whether your business is considered marital property. You may have started it before the marriage, or it grew significantly over the years with both of you contributing in different ways. Courts in Alexandria and elsewhere in Northern Virginia use an “equitable distribution” model, which means they look at what’s fair, not necessarily equal, when dividing assets. This includes your business’s value.
Bourdon & Tortolero, PLLC, helps business owners navigate divorce. We focus on protecting your interests, maintaining stability, and minimizing unnecessary conflict. If you’re going through a divorce and own a small or medium-sized business, contact us for a consultation.
Virginia follows equitable distribution principles, which means courts focus on what’s fair to both parties when dividing assets and debts.
First, the court decides whether the property is marital, separate, or a hybrid. After classification, the court assigns a value and divides the property in a way it considers equitable. This determination is based on a list of statutory factors, including:
Equitable distribution gives judges broad discretion. The final division might not be an even 50/50 split, but it should reflect what the court believes is fair in your specific circumstances.
The first step in dividing a business during divorce is determining whether it’s considered marital property. Courts in the Alexandria area start with timing. If the business was founded during the marriage, it’s usually classified as marital property, regardless of which spouse’s name is on the paperwork. If you started the business before the marriage, it may be considered separate property. Courts also look at what happened during the marriage that may have changed the company’s value or status. For example:
Even if a business began as separate property, local courts recognize that assets can become hybrid—that is, part marital and part separate property. This typically happens when a business that is separate property’s value grows due to active involvement by either spouse during the marriage. That kind of growth is known as active appreciation and may be subject to division. In contrast, passive appreciation, such as an increase in value due to market conditions, is usually treated as separate property.
The more involvement or financial support a spouse provides during marriage, the more likely it is that some or all of the business is marital property.
If your business is part of the marital estate, the next step is to figure out how much it’s worth. A reliable business valuation is key. The valuation affects how property is divided. It may also impact support calculations. The court can’t divide your property fairly without a clear monetary value.
Valuation experts use several methods to determine the fair market value of a business:
Valuing a business isn’t always straightforward. Many small and medium-sized companies don’t have a clear market price or easily transferable shares. Disputes can come up around projected revenue, future growth, or intangible factors like brand reputation or “goodwill.” An owner spouse’s compensation, decision-making control, and personal effort can also affect value.
We use forensic accountants and business valuation experts to help determine your company’s value. Experts can review your financial records and offer a valuation that stands up in court or in settlement discussions. Working with the right professionals helps you avoid under- or overestimating the business’s worth.
Divorce puts financial and operational pressure on many companies. Fortunately, courts can provide legal protections early in the process. A temporary restraining order can prevent either spouse from taking actions that could damage or drain the business. This typically includes moving money, making major changes, or shutting down operations. In some cases, the court may enter an order that requires both parties to keep business activity stable until the divorce is resolved.
Outside of court orders, there are practical steps you can take:
Bourdon & Tortolero, PLLC, can help you take steps to protect your business before, during, and after your divorce. Our attorneys combine legal planning with practical solutions to safeguard your interests.
If the court determines that your business is marital (or partially marital) property, it must be divided. In most cases, the court doesn’t split the business itself. Instead, one spouse typically keeps the business and compensates the other through a buy-out or by giving up other marital assets of equivalent value. This approach allows the business to continue operating without interruption and avoids forcing a sale.
In some situations, a buy-out isn’t possible. The court may order you to sell the business and divide the proceeds. This is more likely to happen when the business has a clearly measurable market value and neither spouse has a strong interest in continuing operations. However, forced sales can be risky. They may reduce the business’s value. Forced sales can also lead to unnecessary tax consequences or operational disruption.
How a business is divided also depends on its structure and size. A small sole proprietorship that depends heavily on the owner’s work is typically treated differently than a medium-sized LLC or S-corporation with multiple employees, assets, and ongoing contracts. Courts will consider ownership rights and the potential impact of dividing or transferring the business.
Finally, some clients ask whether they really need to divide or sell the company. The answer is no—but it’s unusual. Joint ownership usually only works when both spouses are willing to continue a business relationship post-divorce.
To find out how courts are likely to divide your business, contact the experienced divorce attorneys at Bourdon & Tortolero, PLLC, today.
Divorce doesn’t have to jeopardize the business you’ve worked hard to build. Bourdon & Tortolero, PLLC, in Alexandria, Virginia has experience representing business owners throughout Northern Virginia during their divorces. Contact us today for a consultation and find out how we can help.
