Dividing business interests in a Texas divorce

On Behalf of | Apr 13, 2023 | Divorce

When a couple decides to divorce in Texas, one of the most challenging aspects of the process can be the division of assets, particularly when they own a business.

Texas is a community property state, which means that the courts consider all assets and debts acquired during the marriage marital property and are subject to division. Understanding how this affects businesses in a Texas divorce can help both spouses navigate the complexities of property division and protect their interests.

Determining ownership and value

The first step in addressing a business in a divorce is to determine whether it qualifies as community or separate property. If a spouse owned the business before the marriage or inherited it during the marriage, it is generally considered separate property. However, if the couple created or acquired the business during the marriage, it is typically considered community property.

The next step is to determine the value of the business. This process may involve hiring a professional business appraiser who can evaluate the company’s assets, liabilities and potential for future growth.

Options for dividing business interests

When it comes to dividing a business in a Texas divorce, there are several options to consider. If both spouses can maintain a working relationship, they may choose to continue co-owning and operating the business together after the divorce. This option may be appealing if the business has been successful, and both parties have contributed to its growth.

Additionally, one spouse may choose to buy out the other spouse’s interest in the business. The spouse can do this through a lump-sum payment, a property exchange or a structured payout over time.

If neither spouse wishes to retain the business or if a buyout is not feasible, the couple may decide to sell the business and divide the proceeds according to their respective interests.

Addressing a business in a Texas divorce can be a complex and challenging process. By knowing how to proceed, both spouses can work toward a fair and equitable resolution that protects their financial futures.