Divorce for Business Owners in TX
There are many factors that can complicate a divorce, and complex property and assets are one of them. More than two million people in Texas own small businesses, and many more have interests in larger companies. While owning your own business can be rewarding and lucrative, it can also be a serious issue if you and your spouse decide to get divorced.
Business Interests as Community Property
In a divorce, Texas law requires spouses to divide all of their community property, which is the property they acquired during the course of the marriage, with some exceptions. Even if only one spouse owns a business, some or all of the business interests can be considered the property of both spouses.
For instance, if you started the company during your marriage, your business interests could all be considered community property to be divided. If you already owned the business prior to marriage, there is still a possibility that your interests will be community property. Many business owners assume that if they run a company without their spouse, they will simply get to keep it. This is not the case in Texas. Characterization and division of business interests is a complex and technical matter.
Dividing Community Property
Texas law requires spouses to distribute community property in a way that is just and right given their circumstances. Courts consider many factors when determining a fair manner in which to divide community property, including:
- Whether one spouse was responsible for the end of the marriage
- Each spouse’s earning ability and employability
- The education, age, and health of each spouse
- The conservatorship arrangement involving children
All of these factors - and others that might be relevant - should be considered when determining an equitable manner to divide community property.
Dividing a Business
If one spouse owns a business, it can be difficult to distribute any business interests to the other spouse. Often, owners have buy-sell agreements and other contracts that prevent ex-spouses from obtaining ownership interests in a divorce. Instead, the spouses might decide to give the non-owner a larger share of the rest of the community property to allow the business owner to continue operations uninterrupted. For example, one spouse keeps the business, and the other keeps their equity in the home.
If both divorcing spouses own a business together, it can get more complicated, as both spouses rely on the company as their livelihood. There are different options in this situation:
- The spouses decide they can continue working together and keep the business as-is
- One spouse buys out the other’s interests (with either cash or a larger portion of the community property)
- They sell the business and divide the profits
In any case, it is important to have an accurate appraisal of the business on which to base property distribution.
Seek Assistance from an Experienced Divorce Lawyer in Tarrant County
If you have a business or other complicated assets and property, you want the right Tarrant County divorce attorney handling your case who knows how to address sophisticated financial portfolios. Call the Hoppes Law Firm at 817-283-3999 or contact us online to learn more about our divorce services.