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If my Spouse Owns a Business in Texas, Do I Own it Too?

If your spouse owns a business, then you may have ownership rights. If your spouse’s business is considered community property, then it will be subject to division if you divorce. You should seek representation from an experienced attorney who will help you fight for your fair share.

 

At Youngblood Law, PLLC, we have extensive experience helping clients navigate divorces that involve complex or high-value assets. How your property is divided will have a huge impact on your future, so it is essential that you have the help of an attorney who is able to fight for your right to a fair division of property. If you do not secure the assets you are owed in your divorce decree, then you will lose your right to them forever.

 

Our family law attorneys have a wealth of resources and knowledge that will help you to secure the best possible outcome. Drawing upon financial experts and low-conflict strategies, we will help you reach an out-of-court resolution where possible. However, we will also be prepared to fight on your behalf in court if necessary to protect your right to your fair division of property.

 

Arrange a free consultation with an experienced divorce lawyer today and begin to build a roadmap to your future. Contact us today at 817-369-3970.

How Does Property Division Work in a Texas Divorce?

If your spouse owns a business, then you may be entitled to half of it. However, whether you are owed half of the business depends on whether it is separate or community property. In accordance with Texas Family Code § 3.002, Texas is a community property state, which means that community property is subject to division.

One of the first things that your attorney will help you to do is to split your property into separate and community property.

Separate Property

Separate property is any property acquired before marriage by either spouse. Gifts and inheritance acquired in your name while you are married are also considered separate. Unlike community property, separate property is not subject to division and continues to belong to each individual after divorce.

 

So if your spouse owned a business before you were married, does that make it separate property? Not necessarily. Separate property can become community property if assets become commingled (mixed) with other community property during the marriage.

Community Property

Community property is any property and debts acquired during the marriage, regardless of who made the purchase. When you divorce, all property is presumed to be community property unless either spouse can provide clear evidence of separate property.

 

When you divorce, community property will be divided between parties in a “just and equitable” manner.

Just and Fair Property Division in Texas

In Texas, community property must be divided in a just and equitable manner upon divorce. Just and equitable often equates to an equal split, but not always. Equitable means just and fair given the circumstances, and each case will be considered individually.

 

In order to determine community property division in Texas, the court will consider factors such as:

 

  • Length of the marriage
  • Age of each spouse
  • The current custody arrangement
  • Earning capacity of each spouse
  • Health of each spouse
  • Education of each spouse
  • Each spouse’s contributions to the marriage
  • How much separate property each spouse owns
 

You may not need to attend court to determine property division, even if complex assets such as a self-owned business are involved. Your divorce attorney from Youngblood Law, PLLC, will help you negotiate property division and will ensure that your rights are protected. If you can agree on all property and debt division, then you will only need to submit your agreement to the court, which should approve it so long as it is in line with family law.

 

If you cannot agree, then your attorney will present your case to a Judge so that they can make the final ruling.

If My Spouse Owns a Business in Texas, Do I Own it Too?

Unfortunately, there is no simple answer to this question. An experienced divorce attorney can assess the details of your case and help you determine whether you could be owed a percentage of the business.

Is the Business Separate Property?

If your spouse owned the business prior to marriage and kept it separate throughout, then it could be considered separate. However, if it increased in value during the marriage, or the business has become intermingled with marital property, then it could still be claimed as community property.

 

On the other hand, if you signed a prenuptial or postnuptial agreement with your spouse that was designed to protect them as a business owner, then this could prevent you from claiming any of the business. However, a prenuptial or postnuptial agreement is not always enforceable, and if its terms cause you financial hardship, then your attorney may be able to challenge it.

Is the Business Community Property?

If your spouse started their business while you were married, then it may be considered community property. Even if they started it before you were married, but it evolved into a family business that you helped run or fund in any way, then it will lose its separate status.

 

Even if the business remained separate throughout the marriage, if it increased in value, then it is likely to become community property and subject to division.

You may be owed half of your spouse’s business if the court deems it to be equitable.

 

 They are likely to do so if:

 

  • Your spouse founded the business while you were married
  • You contributed in any way, such as working on the business in any capacity or donating money
  • The business expanded using marital funds

How do I Know How Much My Spouse’s Business is Worth?

If your spouse’s business is determined to be community property, then it will be subject to equitable division. Once this has been established, the next stage will be to figure out how much the business is worth through a process called valuation.

 

There are different ways to determine how much a business is worth; some questions that the court may ask include:

 

  • How much would the business sell for?
  • Would the loss of some or all of the business be detrimental to the company?
  • Is one spouse more involved than the other?
  • Are there any tangible assets, such as real estate?
  • What is the value of business goodwill? Goodwill assets are intangible assets such as intellectual property.
 

There are various methods of business valuation, such as:

Asset Approach

The asset approach determines the value of a business by the worth of all of its assets. Including tangible assets such as real estate and intangible assets such as the company’s name and brand.

Market Approach

The market approach compares the value of similar businesses in your area which have been sold. However, for niche businesses, this approach may be challenging.

Income Valuation Approach

The income approach estimates the value of the business by considering how much income it generated over a specific time period.

Seek Help From a Certified Business Appraiser

Dividing a business is incredibly complex, and if your spouse is more involved with the finances of the business, then it could leave you vulnerable. Your attorney may seek the help of a professional business appraiser who will explore the business worth from various perspectives, including its projected future earnings.

 

You and your spouse may decide to hire a mutual business evaluator, or you could hire separate professionals and then rectify any differences.

 

Valuing a business accurately can easily become a matter of contention. Every case must be treated individually to determine what a business is worth based on its unique merits. Once you have reached an agreement on the valuation, you can begin to determine how it can be separated.

What Will Happen to My Spouse’s Business When We Divorce?

There are situations where both spouses can continue to own a business after a divorce. If they can remain amicable and can protect a strong working relationship, then this could be an option. However, if there are any hostilities, then co-ownership may not be a viable solution.

 

Another option is to sell the business and divide the profits. This could be an opportunity for both spouses to invest in their own business ventures and removes financial ties between spouses. However, it could take a long time before a business sells. Furthermore, if your spouse’s business has been a key source of financial support for the entire family, then selling it could be determinantal for all parties involved.

 

Selling or dividing such a business is rarely a viable option, and if one person is running it, then it often makes more sense for them to continue to do so after divorce. However, it is essential that your rights are protected, and so you will need to come to an agreement where a certain percentage of the business assets or income or your spouse may buy you out.

 

In a buyout, your spouse will keep the business but will give you sufficient cash or liquid assets. For example, you could keep the family home in return for giving up your share of the business.

 

If the business comprises most of your marital estate, then you may have to enter a structured settlement that will pay you out over time.

 

The best way to ensure that you receive your fair share of the property is to seek the advice of an experienced divorce attorney. They will help you to determine what the most appropriate option is in your case and which will give you the greatest degree of financial security after divorce.

Dividing a Business in a Texas Divorce FAQ

All debt that was acquired over the course of the marriage is usually considered community property and subject to division. However, if you can show that your spouse was solely responsible for a debt, then you may be able to fight to keep it separate. If the debt remains in both your names and your spouse fails to make payments, then a creditor can still seek payment from you.

No. If your house was purchased while you were married, then it is community property regardless of whose name is on the deed. However, if the house was bought with separate money of one spouse, such as inheritance, then it could remain separate property.

If your divorce involves a business, then it could be considered high-asset. A high-asset divorce is where the estate of one or both spouses equates to a high value. High-asset divorce is complex and requires an experienced high-asset divorce attorney.

Unfortunately, it is common for one spouse to attempt to hide assets to prevent them from being divided in a divorce. This is not acceptable, and if you believe your spouse might be hiding assets, then you should speak with an attorney who can help you take action. If your spouse is found to have tried to hide assets, then they could face harsh penalties, such as losing all rights to those assets.

An LLC is a distinct legal entity and so the property it owns is neither community nor separate property. The interest in the company may be subject to division, but the assets owned by the company are not.

Usually, each spouse is required to cover their own attorney fees in family law matters such as divorce. However, if there is a significant wage disparity, then the court could order the higher-earning spouse to cover some or all of the other fees.

How to Resolve a Business Ownership Divorce Dispute

Your divorce attorney from Youngblood Law, PLLC, will support you in reaching an agreement regarding the division of your spouse’s business and other assets outside of court if possible. Doing so will give you more freedom to reach a resolution that supports the needs of you and your family while also saving time and money on court proceedings.


If you and your ex-spouse cannot agree, then your attorney will present your case to a Judge to secure what is rightfully yours.


Our lawyers will fight tirelessly to protect your rights and secure your fair share of the property. We strive for the best possible outcome so that you can feel secure when you leave your marriage. We will guide you through the entire divorce process and will support you in other important factors such as child custody, child support, and spousal support.


Contact Youngblood Law, PLLC today and arrange a free consultation with an experienced divorce attorney at 817-369-3970.

2501 Parkview Dr Ste. 500, Fort Worth, TX 76102

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