Blogs from February, 2022

If you’re going through a divorce, it’s quite normal for it to be a difficult emotional time. It’s even more natural to avoid your spouse while the divorce is ongoing. Seeking alternative living arrangements–from moving in with your parents to renting an apartment to outright buying a new house, can seem like attractive options. But those decisions can come with serious consequences in the settlement process. If it is at all possible, do not move out of your house during a divorce in Virginia.

A Safety Disclaimer

We’re going to lay out all the reasons you should stay in your home during divorce proceedings, along with some of the challenges that come with that decision. Please know that if you are a victim of domestic violence we absolutely understand that this is not an option for you. The safety of you and your children always come first. If you are a victim of domestic violence, call The National Domestic Violence Hotline at 1-800-799-7233 and get help.

What You Do Now Can Matter Later

When the court makes the final decisions about your divorce settlement, important issues like child custody, visitation and property division will likely be impacted by your existing living arrangements and how long they have been in place. In other words, the situation you currently abide by can set a precedent for what your life will look like post-divorce.

Now, you won’t lose ownership rights in the home you and your spouse bought together if you move out. But if you have any designs on moving back in there someday, it’s preferable to have never left.

Property Division & Your Home

Remaining in your family home is about more than just avoiding the inconvenience of moving twice (although let’s face it, who really wants to do that anyway?). The Virginia courts are not obligated to simply give you 50 percent of the house, or any other piece of property in the settlement. They are obligated to treat you fairly. The legal term for this is equitable distribution. What is equitable can often come in the eye of the beholder, and a harsh reality is that the beholder right now is not you, your lawyer, or your spouse, but a judge in Virginia circuit court.

The factors the judge will consider in equitably distributing all property, including the house, may vary. But it is certainly reasonable to presume that the court will consider who is physically living there. If you and your spouse both want the house, and they are the ones living there, the judge may lean in their favor. Equitable distribution laws require that the court award you assets in another area of the settlement–maybe you’ll get a larger share of the stock portfolio–but that may not have been the asset you really wanted.

How the Kids Could Impact Who Gets the Home

Virginia judges will be even more inclined to award the house to its current occupant if children are involved. Acting in the “best interest of the child” is the guiding principle in all decisions that impact the kids and keeping the children in a stable living situation is part of considering their best interests.

Perhaps you also want the kids to stay in the house, with a plan of securing custody and moving back. That’s possible, but perhaps the single most important reason not to move out of your house during a divorce is that this can work against you in custody decisions.

Let’s say you have a situation where both parents have reasonably good relationships with their children. You’ve living in an apartment nearby but are very much active in your children’s lives. You pick them up from school, go to their extracurricular activities and still contribute financially to their upbringing. The kids are handling the whole situation with their parents about as well as anyone can expect.

Now, a judge looks at this landscape and considers the best interests of the child. The judge might well conclude that it’s best to leave well enough alone. You have done nothing wrong under this scenario. In fact, you’ve done everything right. But the best interests of the child are deemed to be just staying the course.

So, your spouse gets the house and primary custody of the kids. You get visitation rights, and you get taken care of in other aspects of the settlement. But custody of your kids was what you really wanted. The chances might have been improved if you were still living at the house.

The issue of precedent can also apply to the financial settlement. Let’s build off the scenario above. You were still making monetary support of the house a priority. The judge may again look at this and conclude that your spouse would be unable to support the kids and the house on their own. But you have demonstrated an ability to support yourself in an apartment and still make payments. We’ve already established that your spouse getting the house and custody is in the best interest of the children. Therefore, you might also have to continue making payments to allow this to continue.

It’s all adding up to a very bad outcome on the divorce settlement. It’s worth repeating that the judge will be obligated to do whatever possible to secure an equitable outcome for you in other areas of the settlement. But it’s also worth repeating that equity is in the eye of the beholder and that beholder is the person in the black robe. The possible areas where you can be made whole are dwindling.

We won’t promise that none of these challenges will come up if you stay in the house, but we can say that your chances of getting the settlement you want are better if you don’t move out.

An Honest Look at the Challenges

We already noted one very big obstacle for some who choose to stay in the shared house, and that is domestic abuse. We must also acknowledge that Virginia divorce laws can put additional challenges in front of couples. We’re here to help you navigate these challenges and protect your interests. The most notable challenge beyond an abuse situation is that Virginia’s no-fault divorce options are limited. There is only one viable ground for a no-fault divorce and that is separation. A couple without children must be separated for at least six months to file for no-fault. Couples with children must be separated for at least a year.

Suffice it to say, separation means living in different houses. And the whole premise of this discussion is predicated on staying in the house. That leaves you with two options if you want to avoid moving out. One option is to engage in a high-stakes game of chicken with your spouse and see who blinks first and moves out–because legally, neither of you can force the other person to move. Or file on fault grounds, where the divorce can be pursued while you are under the same roof.

Virginia’s fault-based grounds for divorce require proof in court. One of these grounds is physical cruelty. But, for the sake of your own safety, staying in the house means getting the abuser out. Getting them to leave if they don’t want to will require some legal work at proving the abuse. Another fault-based ground for divorce is conviction on a felony charge. Of course, if your spouse is going to prison, you probably aren’t feeling the need to move in any case.

Finally, there are sexual improprieties, including, but not limited to, adultery, that can be used as grounds for a fault-based divorce. Perhaps this is the situation you’re in. Please be aware that filing on fault-based grounds puts those grounds in the public record. It’s possible that you may not want your children to hear why, exactly, the marriage is coming to an end.

Taking the Next Step

You deserve a living arrangement where you can be both safe and sane. At The Law Offices of Daniel J. Miller, we understand the challenges you face, now in the short-term, as well as those that will come up in the long-term if you move out. It’s our job to see the big picture, to listen to your situation and craft the single best legal strategy for your needs. We’ve been doing this work for 20 years, we’re good at it and we want to help you. Call us today at (757) 267-4949 or contact us online so we can set up an initial consultation.

A divorce can be a difficult and complex period of your life to navigate for reasons ranging from the deeply personal to the strictly professional. Some things fall into both categories–like the business that you and your spouse own together. What happens to a joint business in a Virginia divorce?

Businesses are classified as property under Virginia divorce law, the same as the house you share, your retirement accounts, furniture, heirlooms, and other assets. All these assets are brought to the settlement table.

Types of Property in a Virginia Divorce Case

The first step is to determine what type of property the business is. Property can be classified three different ways in a divorce…

• Separate Property–This is property that was yours before the marriage or was received as a gift during the marriage (e.g., an inheritance). A key point, though, is that to be truly separate, the property must have been kept separate from the property you and your spouse share.
• Marital Property–This is the property that is either titled jointly or was acquired by either one of you during the marriage.
• Hybrid Property–As you might have deduced from the name, hybrid property is a combination of both.

A joint business is most likely to fall into either the marital or hybrid category. If you and your spouse started a business together after you were married, then this is a clear-cut case of marital property.

But what if you were the one who started the business? Now there are several variables the court will have to consider…

• Were there investments made in the business after the marriage? If so, any increase in value that came from the infusion of property that was jointly owned will itself be considered jointly owned.
• Did your spouse work in the business or in some other way provide value, and in turn depend on its success?
• Was your business the primary source of income in a situation where the spouse stepped back from their own career to tend to other familial needs (e.g., raising children or caring for aged parents)?

Equitable Distribution of Property in a Divorce

The above examples are just a sampling of what a court will look at in determining a fair and equitable settlement. Which leads us to our next point. Virginia property distribution is required by law to be equitable, but not necessarily equal.

The difference can seem like semantics, but it can have a major impact in how property like a business is handled in a divorce. Property does not have to be split down the middle 50/50. The principle of an equitable settlement is simply that it be fair in the eyes of the court.

Virginia courts take a holistic look at a marriage in determining what constitutes equity. The original step of how property was classified will be an important part of that. So will how the day-to-day life of the marriage functioned.

Courts will take into consideration how long the marriage lasted. A longer-term marriage that lasted, let’s say, for 20 years, will likely see the spouses given greater responsibility to each other than a short-term marriage that ended after 3 years.

What might that mean for a business that you started prior to the marriage? First off, if you were married for 20 years, simple practicality makes it more likely that common assets were invested into the business and that your spouse jointly owns a piece of the business on that basis alone.

Or let’s consider the business that was started after the marriage. Legally, it belongs to both of you, but you were the one who put all the work in. An equitable solution will require the court to look at external factors. If you were putting the work in because they were raising the children, the court is more likely to consider the business as simply joint property.

But what if your spouse had their own career and was more or less indifferent to your business pursuits? You can make a strong argument that an equitable solution will put your business completely in your hands. Your spouse still has a valid claim because the business was started during the marriage. But it’s possible that their claim can be satisfied with the distribution of other marital assets.

All the assumptions we’ve made so far have assumed the business is profitable and at least reasonably free of debt. We hope that’s the case in your situation but be assured it would be quite normal if the business is carrying some financial liabilities. How will that work?

The same equitable distribution principle applies to liabilities. The main consequence is that who is arguing for what is likely to be flipped on its head. Your spouse is more likely to be looking for a way out, while you might be looking for some relief–especially if you can show that you started the business or quit a full-time job or took any other type of risk at your spouse’s behest.

There are as many possible examples out there as there are people. All of which is to say there is no reason to assume the court will order your business to be sold and the profits split 50/50 or to assume that your spouse will share ownership with you on a 50/50 basis. Those are possible outcomes, but certainly there can be several others that better fit the definition of equitable.

The wide range of discretion given to the court makes it all the more important that you have a divorce lawyer who can best make your side of the story heard.

How Valuable Is the Business?

Equitable distribution means the court must know the value of the business. This is much more than simply reporting annual gross revenue, although that is part of it. Proper valuation of a business also means looking at its assets, both short and long-term.

One factor that will be considered is how much real property the business owns. Real property is a term primarily used in real estate and it has great significance here. It presumes ownership of land, a building, or some other physical asset.

Let’s say you started an auto repair shop. Do you own the building that you operate out of or is it leased? That’s going to be a significant factor in determining the value of the business.

Maybe your business is low-overhead and can operate either out of the house or through a modest storefront. But perhaps something intangible serves to increase its value. Intellectual property, such as a patent or copyright, can be a valuable asset.

The value of your business will come down to much more than its market value, which is defined as the amount a willing buyer would pay to acquire it. So, The Commonwealth of Virginia has three different methods that can be used in valuation…

• Asset Valuation–This method can be appropriate when valuing businesses like the auto repair shop we discussed above or other businesses that rely heavily on physical assets.
• Income-Excess Earning–This method can be reasonably applied when looking at white-collar professional practices. Our own profession of law is one example, as would be accounting. The court will look at the income you’re earning as the owner of the business and compare it to the salary you might reasonably expect to make if you were an employee somewhere else. The amount over and above that expected salary is the excess–and under this method, the value of the business.
• Market Valuation–As noted, the court does not have to use a straight market valuation, but it doesn’t mean that it can’t. Like with equitable distribution, the courts have the ability to be rigid and they have the capacity to be flexible. It’s up to your legal team to define your interests and persuade the court to pick the methodology that will lead in your preferred direction.

Divorce is not easy and settlement negotiations carry their own set of challenges. It’s certainly not something to go through alone and not something where you can afford to settle for second-best when it comes to your legal representation. Your livelihood and your future dreams are at stake. The Law Offices of Daniel J. Miller is experienced in cases like yours and tenacious in fighting for your rights. Call us today at (757) 267-4949">(757) 267-4949 or contact us online so we can set up an initial consultation.