Getting Divorced in Texas and Own or Partially Own a Business? Here’s What You Need to Know

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Getting divorced is never easy. However, owning part or all of a business can significantly increase the complexities of the divorce process in Texas. Prepare yourself with the help of an experienced Texas divorce lawyer who can tell you more about the personal and professional impacts the divorce might have on your future. Given that you are likely very invested in your business and may require it for your source of income, it’s in your best interest to understand the possible issues that can arise during a Texas divorce.

One common concern for any divorcing party is that your spouse will automatically receive half of your business as part of the divorce settlement due to Texas community property laws. However, this outcome depends on any existing business structures and agreements, which is why you should talk to a family lawyer with experience in these legal areas to learn more about how it might play out for you. Most business owners have done some work to protect themselves personally in the event of a divorce. If you haven’t, we recommend hiring a divorce attorney now.

Texas Property Division 101

Texas family court judges must first distinguish between what is separate and community property in a divorce. The law defines separate property as what belongs to each spouse in the marriage and will remain theirs when the marriage ends. If you can prove you received the property in question during the marriage for you and you alone, a judge might agree that it is separate property. However, what happens to business interests?

The judge can divide community property as they see fit — which does not mean precisely equal. Instead, the judge considers factors like each spouse’s earning potential and education. A business, though, is much more personal. Things are more complicated if both spouses are involved in the enterprise.

Is My Business Community Property?

If one of the spouses created the business during the marriage, it could qualify as community property. In general, if you established your business before the marriage, it is likely separate property. It would not come up during discussions over property division as a piece of community property. However, talk to your divorce attorney to be sure. The reverse is also generally true, so if you created your business during the marriage, it might be community property and up for division.

You’ll want to talk to your lawyer if you believe the business could become an issue during your divorce hearings. If any of the following situations apply to you, your spouse could be entitled to part of the business:

  • Your spouse was actively involved in running the business, such as donating initial funds to get the company off the ground or working in the company as an employee.
  • The business began during your marriage
  • You used marital money, such as community property or your spouse’s paycheck, to help expand the business

The exact portion to which your spouse might be entitled varies based on a few factors. You’ll need robust evidence on your side if you want to argue a smaller portion and can only do it when you have a Texas divorce attorney involved in your case early on.

The first step is to get a valuation of the business to determine the total amount in question. You might be able to work through a settlement offer with your former spouse outside of court to avoid the frustrations of going to court.

If neither spouse wants to remain actively involved in the business, you have a few options:

  • Your spouse might receive a certain percentage of income or assets in the business at the time of the valuation
  • You could buy out any portion of the business the spouse owns or potentially owns on a property division award
  • Close the business entirely and liquidate assets
  • Sell the business and split the profits between both parties
  • Divide the business into two unique entities
  • Exchange other property assets for your business stake

Suppose you’re not sure what’s suitable for your company. Schedule time to speak to a Texas divorce attorney about your case. A lawyer can tell you more about what to expect and some of the common pitfalls. With your business on the line, there’s no doubt you need the help of an experienced lawyer to guide you through property division. Don’t wait to get help because time is of the essence with a business property valuation.

Youngblood Law, PLLC: Definitive, Decisive, Dedicated

When you own or partially own a business in Texas, divorce can become a complicated process. As a business owner, are you concerned about the consequences of divorce on your company and financial future?

You need a Fort Worth family law attorney with years of experience in handling these complex situations. At Youngblood Law, PLLC, we provided custom work for each client, understanding that divorce and family law is not a cookie-cutter, one-size-fits-all strategy. For us, success is a way of life. We approach every case with compassion and non-judgment, utilizing our years of experience and knowledge of the law while avoiding unnecessary toxicity. We’ll not only handle your divorce with professionalism and competence, but we’ll also set you up for success moving forward.

To schedule your consultation, give us a call at (817) 601-5345 or complete our online form.

 

Copyright© 2021. Youngblood Law, PLLC. All rights reserved.

 

The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice from the individual author or the law firm, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting based on any information included in or accessible through this post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.

Youngblood Law, PLLC
2501 Parkview Dr Ste. 500
Fort Worth, TX 76102
(817) 601-5345
https://youngblood-law.com/

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