Virginia entrepreneurs can risk losing their business in a divorce if they don’t set up a prenuptial agreement or a trust. A prenuptial agreement may help people who started a business before they got married to keep their business separate from the marital property. A person who has generational wealth or ownership in a family business may want to protect those kinds of assets with a trust.
There are other ways besides a prenup for a person to protect their business from a divorce. A buy-sell agreement can be signed by all of the co-owners of a business including married spouses. This type of agreement dictates what will be done with the business if one of the co-owners dies or chooses to leave. A buy-sell agreement may also require a spouse to sell their share in a business if there is a divorce.
Many spouses start businesses together while they are married, and it can difficult to determine what to do with a jointly-owned business in the event of a divorce. Though it can be complicated, some continue to operate their businesses together after they divorce. Another option is for one spouse to buy the other spouse’s share in the business.
Business owners may hold most of their net worth in their enterprises, so the fate of a business after a divorce can be the most important topic in negotiations. A divorcing spouse who is a business owner may want to work with an attorney to determine the best way to handle this aspect of property division.