Like any other property in divorce, businesses are subject to oversight and sometimes division by a court. In the case of an LLC, it is actually the membership interest that someone owns rather than a stock like in a corporation. This membership interest is a property like anything else and is subject to the laws regarding the division of that property in a divorce.

In Virginia, a divorce court will first value the membership interest in an LLC. This process begins with either or both spouses hiring an expert like a forensic accountant to come up with a value for the LLC as a whole. Then, if the spouse owns 100% of the membership interest in the LLC, that whole amount is subject to the court’s jurisdiction. If the spouse owns a percentage less than 100%, the court has no power over the percentage owned by the other members of the LLC. The court will simply take the value of the LLC as a whole and then apply the percentage of the spouse’s ownership to determine the amount of the LLC it will be ruling on.

Once the court has a value for the LLC, the court will classify it as marital property, separate property, or a combination of both (sometimes called hybrid property). If the LLC is 100% separate property, it’s usually because it existed prior to the marriage or was not formed until after the parties separated. In such instances, the court has no power over the LLC and the spouse who owns it gets to keep it. If the LLC is 100% marital property, the court has the power to order that the owning spouse pay the other spouse a sum of money to compensate them for their marital interest. That doesn’t always happen and certainly, it is not required that it be 50% of the value. If the LLC is part marital and part separate property, then the court does the same thing as it would for 100% martial LLC, but only for the percentage of the LLC that’s actually marital property.

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The division of an LLC or any business property in a divorce can be among the most complex portions of any family law case. You need an experienced attorney with a background in litigating these issues to give you the best chance at a good outcome. Contact us today to learn how we can help you.