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Is a Business Considered Marital Property in Virginia?
A business can be considered a marital asset if it was acquired or started either before the marriage or during the marriage. Virginia law does not specifically discuss business assets, but it does lay out in detail which types of property are separate and which types are marital.
Is A Business A Marital Asset?
A business is a marital asset. In Virginia, all property acquired during the marriage is subject to equitable distribution and may be divided in divorce. This includes any business assets, including cash and other liquid assets like stocks or bonds that were purchased during the marriage. However, the value of the business itself may not always be easy to determine, so it’s important to have an experienced attorney help you determine the best way to divide your business on paper (and if necessary, in court).
Business can also be divided outside of divorce by spouses entering into prenuptial agreements prior to getting married. A prenuptial agreement can outline how certain individualized issues—including businesses—would be handled between two people in case they divorce later on down the road.
What Is The Difference Between Marital And Separate Assets?
Marital assets include all assets acquired during the marriage, including property, income, and debt. Separate assets are those that one spouse owns before the marriage or that one spouse acquires during the marriage by gift, bequest, devise, or descent.
If you’re going through a divorce in Virginia and want to know whether your business is marital property or separate property, consider these factors:
- Did you create it with your spouse?
- Did you work on it together?
- Did you build it completely on your own?
- Did the value increase while you were married?
Which Law In Virginia Discusses Business Assets?
The laws governing the division of marital property in Virginia are found in the Virginia Code. Specifically, the law regarding the division of marital property in a divorce case is contained in Section 20-107.3 of the Virginia Code. This section sets out the general rule that marital property should be divided “equitably” between the parties.
The Virginia Code defines “marital property” as “all property titled in the names of both spouses” and “all other property acquired by each spouse during the marriage.” This would include any business that was acquired by one or both spouses during the marriage.
The court will also take into account other statutory factors such as the length of the marriage, the contributions and debts of each spouse, and the income and property of each party when determining the equitable distribution of the business assets.
Marital vs. Separate Assets
In the context of a divorce, the difference between marital assets and separate assets is important because it determines how the assets will be divided between the two spouses.
Marital assets are those assets that were acquired by either or both spouses during the course of the marriage. They are considered to be jointly owned by both spouses, regardless of whose name is on the title or whose income was used to purchase the asset. Examples of marital assets include:
- The family home
- Cars, boats, and other vehicles
- Bank accounts
- Retirement accounts
- Furniture and household goods
- And a business acquired during the marriage
On the other hand, separate assets are those assets that were owned by one spouse prior to the marriage, or that were inherited or received as a gift during the marriage. They are considered to be the separate property of that spouse and are not subject to division in a divorce. Examples of separate assets include:
- Assets owned prior to the marriage
- Assets received as inheritance or gifts during the marriage
- Personal injury settlements or awards
- Some retirement benefits that were earned prior to the marriage
It’s important to note that in some cases, separate assets can become commingled with marital assets or can increase in value during the marriage. In those cases, the court may still consider those assets to be marital assets subject to division.
It’s also important to note that laws governing the division of property in a divorce can vary from state to state, so it’s always best to consult a qualified attorney who can advise you on the laws in your specific state.
Business Divorce Lawyer In Northern Virginia
We hope this has helped you learn more about marital assets, specifically about owning a business while married. If you have additional questions or would like more clarity on your specific situation, our team can help.
To talk with a divorce lawyer in Northern Virginia, including Arlington County, Fairfax County, Fauquier County, Loudoun County, or Prince William County, call Graham Law Firm, PLLC at (703) 443-9360 or contact us online to schedule a family law consultation.