Most Virginia divorces prove challenging for the people involved at least intermittently. Between surging emotions and disagreements about practical matters, divorce proceedings can be very challenging for couples to navigate.
Couples in unusual circumstances sometimes need to have more difficult conversations with each other than usual and more terms that can spark intense disagreements as well. For example, when couples own a business together, that could very likely make it harder for them to resolve property division matters in particular. These are a few of the reasons why divorces involving a family-owned business tend to be so complex.
The income consequences
Starting or growing a business is expensive and requires a lot of time investment as well. Both spouses will often contribute to the business and could very well also rely on it for income. Sometimes, people can continue working together at the company or owning it jointly after the divorce. However, often at least one of the spouses will have to start looking for new employment and could have income-related concerns.
The need to give up an ownership interest
Unless the spouses negotiate a very thorough contract that allows them to retain joint ownership of the organization and provides clear instructions for future conflicts, it may be all but inevitable for one of the spouses to have to give up their interest in the company. The more that each spouse has contributed to the business, the more strongly they may feel about protecting their interest in the business during the divorce. They may have to wait for a judge to decide who keeps the company if they can’t agree.
Disagreements about the business’s value
In a buyout scenario where one spouse will keep the company and the other will give up their interest in it, the spouses will typically need to agree about what the company is worth. A business valuation can be difficult even in the best of circumstances. The spouse retaining the business will have a very different perspective than the one seeking financial compensation for their ownership interests in the business. It may be necessary to bring in outside professionals for business valuation, and even then, spouses may still have wildly different final figures.
Family-owned businesses are often not just a financial asset but also a source of someone’s personal identity and a contributing factor to their self-esteem. It can, therefore, be very difficult for people to navigate the practical matters related to their businesses during a divorce. Preparing for those challenges ahead of time may help people set obtainable goals while preparing for a complex process that is about to unfold.