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When one spouse owns a business or a share of a professional practice, the divorce usually turns on three questions: what the business is worth, how much of that value is marital, and what the owner actually earns. Each is contested, each depends on financial records and expert testimony, and each affects the others. I represent business owners and their spouses in Fairfax, Loudoun, and other Northern Virginia courts on both sides of those questions.
I am Jason A. Weis, an attorney with Curran Moher Weis in Fairfax. I clerked at the United States Tax Court, and I have bought, operated, and sold businesses of my own. I have represented founders, owners of closely held companies, partners in law and consulting firms, and government contractors. That background shapes how I read a set of financial statements and how I examine the experts who interpret them.
Is a Business Marital Property in Virginia?
It can be, in whole or in part. Virginia divides property under its equitable distribution statute, Va. Code § 20-107.3. A business started or acquired during the marriage is generally marital. A business owned before the marriage begins as separate property, but its growth during the marriage can become marital.
The statute addresses that growth directly. An increase in the value of separate property is marital only to the extent that marital property or the personal efforts of either spouse contributed to it, and personal efforts count only if they were significant and resulted in substantial appreciation. The spouse who does not own the business must first prove that contributions or personal effort were made and that the value increased. The burden then shifts to the owner to prove that the increase, or some part of it, was not caused by those contributions. Va. Code § 20-107.3(A)(3)(a); Martin v. Martin, 27 Va. App. 745 (1998) (en banc). For an owner who has spent the marriage running the company, that framework often decides the case.
How a Business Is Valued
Virginia does not prescribe a single valuation method. Russell v. Russell, 11 Va. App. 411 (1990). Appraisers commonly use asset-based, income-based, or market-based approaches; the question in each case is whether the method chosen fits the business and is supported by the evidence. The court values the business as of the date of the evidentiary hearing unless, on a timely motion and for good cause, it orders a different date. Va. Code § 20-107.3(A).
Two issues recur in nearly every case.
Goodwill. Goodwill can be a marital asset. Russell, 11 Va. App. 411. But Virginia distinguishes between personal goodwill, which reflects the owner’s own skill and reputation and is separate property, and enterprise goodwill, which belongs to the business itself and may be marital. Howell v. Howell, 31 Va. App. 332 (2000). A valuation that fails to separate the two can treat the owner’s personal earning capacity as if it were an asset of the business. A capitalization-of-earnings valuation that excludes the owner’s own salary can avoid that problem, and a spouse challenging such a valuation must show that it actually failed to exclude personal goodwill. Hoebelheinrich v. Hoebelheinrich, 43 Va. App. 543 (2004). For a professional practice, that distinction is often worth more than any other single issue in the case.
Buy-sell and operating agreements. A shareholder or operating agreement that fixes a buyout price or limits transfer is relevant to value but does not control it. The court must determine the business’s value to the parties. Bosserman v. Bosserman, 9 Va. App. 1 (1989).
More detail is in how Virginia courts value closely held businesses in divorce.
The Owner’s Income
An owner’s salary is often only part of what the business provides. Distributions, retained earnings, personal expenses paid by the company, vehicles, travel, and family members on the payroll all bear on what the owner actually has available. For child support, gross income from self-employment, a partnership, or a closely held business is reduced only by reasonable business expenses, and the party claiming a deduction must prove it. Va. Code § 20-108.2. Spousal support likewise turns on the parties’ financial resources and earning capacity. Va. Code § 20-107.1(E). See spousal support in Fairfax and Loudoun and the Virginia child support guide.
The same records drive both the valuation and the support calculation, and the two must be consistent. A position that minimizes income for support while maximizing value for property division, or the reverse, rarely survives cross-examination.
Protecting the Business and the Record
A business does not stop operating because its owner is getting divorced, and the court can act while the case is pending. Under Va. Code § 20-103, the court may enter orders to preserve the estate of either spouse so that it is available to satisfy the final decree. At the end of the case, the court considers whether either spouse used marital property for a separate purpose, or dissipated it, in anticipation of divorce or after the separation. Va. Code § 20-107.3(E)(10).
For the owner, that means continuing to operate the business in the ordinary course and documenting decisions that affect its value. For the other spouse, it means securing the records early: tax returns, financial statements, general ledgers, bank statements, loan applications, and the governing agreements. Loan applications and personal financial statements given to lenders are often the most candid documents in the case.
Frequently Asked Questions
I started my business before we married. Is it still mine?
It began as your separate property. Whether part of its growth during the marriage is marital depends on whether marital funds or significant personal effort contributed to substantial appreciation, under the burden-shifting rules in § 20-107.3(A)(3)(a). The answer depends on the company’s financial history.
Does my spouse get half of my business?
Not necessarily. Virginia does not presume an equal division of marital property. Papuchis v. Papuchis, 2 Va. App. 130 (1986). The court classifies and values the interest and then divides the marital estate after considering the statutory factors. If the business is titled to one spouse alone, the court cannot order it divided or transferred; the other spouse’s share is addressed through a monetary award. Va. Code § 20-107.3(C).
Who chooses the valuation expert?
Each side may retain its own expert, and the parties sometimes agree on a single neutral appraiser. The choice of expert, and the information the expert is given, often shapes the result.
Is my professional reputation part of the value?
Personal goodwill, the value of your own skill and reputation, is separate property under Virginia law. Enterprise goodwill that belongs to the practice itself may be marital. Howell, 31 Va. App. 332.
Will my business records become public?
Financial records exchanged in discovery are not automatically filed with the court, and protective orders are available in appropriate cases. Confidentiality should be addressed early, before documents are produced.